AUD/USD Climbs to $0.65553 Amid RBA’s Hawkish Outlook and Fed Rate Cut Speculation

The Australian Dollar (AUD) witnessed a rise to $0.65553 against the US Dollar during early European trading on Thursday. This uptick was supported by the Reserve Bank of Australia’s (RBA) firm stance on interest rates.

Governor Michele Bullock’s upcoming speech is eagerly anticipated by investors, as it may provide further insights into the central bank’s future monetary policy.

At its latest meeting, the RBA held the interest rate steady at 4.35%, marking the sixth consecutive hold. Governor Bullock remarked, “Inflation is persistently high and may require us to maintain elevated interest rates longer than initially expected.”

This indicates a preparedness to combat inflation aggressively, which could underpin the Aussie dollar short-term.

The #Australiandollar has appreciated to around $0.655, nearing a two-week high after #RBA Governor #MicheleBullock signaled the central bank may raise rates again to fight #inflation.
Join us for today's live #trades! https://t.co/eJCD1xPGFJ#forexmarket #australia #germany pic.twitter.com/sI3J5pmYSb

— Ella_xauusd (@Ella_xauusd2408) August 8, 2024

Economic Indicators from China Impact AUD

On the global economic front, the National Bureau of Statistics of China is set to release the Consumer Price Index (CPI) and Producer Price Index (PPI) for July.

Forecasts suggest a slight increase in CPI to 0.3% from June’s 0.2%, while PPI is expected to drop to 0.9%.

Any deviation from these expectations might stoke fears of a slowdown in China, impacting the Australian economy due to its significant trade ties with China.

Such outcomes could exert downward pressure on the Australian dollar.

U.S. Monetary Policy and Its Effects on AUD/USD

In the United States, market sentiment is shifting towards a more substantial Federal Reserve rate cut, with current predictions suggesting an 85% likelihood of a 50 basis-point reduction in September, a sharp increase from last week’s 11.5%.

JPMorgan’s chief economist, Michael Feroli, suggested, “There’s a strong case to act swiftly on rate adjustments to pre-empt economic downturns.”

This growing expectation for U.S. rate cuts could weaken the U.S. Dollar, potentially providing further support to the AUD/USD exchange rate.

Australian Dollar appreciates due to hawkish sentiment surrounding the RBA:-

The Australian Dollar (AUD) appreciates against the US Dollar (USD) following the comments from Reserve Bank of Australia (RBA) Governor Michele Bullock on Thursday.

— CentFx (@cent_fx) August 8, 2024

AUD/USD Technical Analysis and Trading Strategy