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Turning to AUD/USD, the Aussie housing sector will be in focus early in the Wednesday session. According to preliminary reports, building permits fell 0.3% month-on-month in February after rising 6.9% in January, while private house approvals rose 1%, down from 1.4% in January.
Economists consider housing sector data a leading indicator of the Aussie economy. Upward trends in housing approvals suggest a favorable demand environment, potentially pushing house prices higher. Rising house prices could boost consumer confidence, spending, and inflation.
However, tariff developments clouded market sentiment. Overnight, President Trump affirmed the roll out sweeping tariffs, raising levies on Chinese imports to 104%. With China accounting for one-third of Australian exports and Australia’s trade-to-GDP ratio above 50%, reduced demand for goods may affect the Aussie economy. A deteriorating economic outlook may raise expectations of multiple RBA rate cuts, pressuring the AUD/USD pair.
Australian Dollar Daily Outlook: Fed Policy in Focus
In the US session, FOMC member chatter will influence AUD/USD. Hawkish remarks could widen the US-Aussie interest rate differential in favor of the US dollar. A wider rate differential may drag the AUD/USD pair below $0.59 toward the upper band of the descending channel.
Conversely, dovish rhetoric may narrow the rate differential, potentially driving the pair toward the April 7 high of $0.61268.
