The AUD/USD pair is trading in positive territory around 0.6545 in Wednesday’s early European session, gaining 0.38% on the day. The Reserve Bank of Australia (RBA) delivered hawkish interest rate guidance, boosting the Australian Dollar (AUD) against the US Dollar (USD). Market players are now anticipating a potential 50 basis points (bps) rate cut by the Federal Reserve (Fed) in September, which could further impact the currency pair.
During the RBA’s August policy meeting, interest rates were left unchanged at 4.35% for the sixth consecutive time. RBA Governor Michele Bullock emphasized the challenges of inflation and hinted at the need to maintain higher interest rates for an extended period. This hawkish guidance on interest rates is expected to support the Aussie in the short term.
Looking ahead, investors will be closely watching the National Bureau of Statistics of China’s release of the Consumer Price Index (CPI) and Producer Price Index (PPI) for July. Any unexpected readings could signal a potential economic slowdown in China, impacting the AUD as China is Australia’s largest trading partner.
On the USD front, traders are increasing their bets on a deeper rate cut by the Fed in September. The rising speculation of Fed rate cuts could weaken the USD and create a positive environment for the AUD/USD pair.
Australian Dollar FAQs
Some of the key factors influencing the Australian Dollar (AUD) include:
- Interest rates set by the RBA
- Price of Iron Ore
- Health of the Chinese economy
- Inflation, growth rate, and Trade Balance in Australia
- Market sentiment
Overall, the AUD is influenced by a combination of domestic and international factors, making it a currency to watch for potential trading opportunities.