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Australian Dollar finds a saviour in data centres

Australian Dollar finds a saviour in data centres

FXStreetFXStreet2026/05/28 22:51
By:FXStreet

The Aussie Dollar walks into Friday's Asia session in better shape than yesterday's soft Consumer Price Index (CPI) had any right to leave it. AUD/USD spent Thursday clawing back from a test of the 0.7100 handle to settle near 0.7150, helped by a Q1 business investment print that no one saw coming and a US Personal Consumption Expenditures (PCE) release that gave the Federal Reserve (Fed) very little to chew on. The result is a pair that looks heavy on the daily chart, supported by a structural story almost no analyst is talking about.

PCE was a non-event, and that mattered

April Core PCE printed at 3.3% year-on-year (YoY), matching consensus, with the monthly figure softening to 0.2% from the 0.3% expected. Headline PCE accelerated to 3.8% YoY, the highest since May 2023, but the market correctly read that as an energy story tied to the Iran conflict rather than a broadening inflation problem. CME FedWatch pricing still tilts roughly 50/50 on whether the Fed will hike at least once by year-end, and the muted reaction across risk assets, stocks barely flinched, says traders are content to wait for the next jobs print before re-pricing the curve. For AUD/USD that translated to a US Dollar that couldn't punch through 0.7100 even with PCE on the tape.

The data centre trade is doing structural work

The standout from Thursday's Australian release was the Q1 Private Capital Expenditure (Capex) print at 6.5% quarter-on-quarter against the 1.0% consensus. Equipment, plant and machinery surged 18.1%. The Australian Bureau of Statistics (ABS) attributed almost all of the jump to data centre buildout, and forward estimates for 2026-27 capex were revised up nearly 10%. This is the kind of investment cycle that doesn't show up cleanly in the Reserve Bank of Australia's (RBA) inflation models but absolutely shows up in growth, productivity, and eventually in the rate path. The same release showed April household spending falling 1.1% month-on-month (MoM), more than double the expected drop. The RBA now has a clean split, capex booming, the consumer rolling over, and that probably keeps it on hold rather than cutting aggressively. A held cash rate is a yield buffer the Aussie has been quietly leaning on.

Technical setup heading into Asia

The daily 50-period Exponential Moving Average (EMA) sits near 0.7100 and held cleanly on the Thursday test. Daily Stochastic Relative Strength Index (Stoch RSI) is rolling over from overbought but still has room to work lower before reaching support, suggesting any push higher is on borrowed time without a fresh catalyst. The cycle high near 0.7300 from earlier this month remains the line in the sand. Friday's Asia session is likely to be quiet, the calendar carries only second-tier US data later in the day, and most of the actionable risk sits in the weekend China Purchasing Managers Index (PMI) prints and next Wednesday's Australian Gross Domestic Product (GDP).

End-of-week framework

Bias is neutral with a marginal upside lean while 0.7100 holds on a daily close. A reclaim of 0.7200 puts 0.7250 back in play, with 0.7300 the level bears need to defend to keep the recent pullback alive. Below 0.7100, the path opens quickly to 0.7050 and then the psychological 0.7000 handle, where structural buyers should reload. The events that matter into next week are the China NBS PMIs on Sunday, Fed Chair Powell's speech Monday, Australian Q1 GDP Wednesday, and US Nonfarm Payrolls (NFP) Friday. Until then, expect grinding range trade and let the data do the work.

AUD/USD 15-minute chart

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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