In Monday’s early Asian session, the AUD/USD pair is trading on a stronger note around 0.6670. The positive sentiment across markets and increasing expectations of a Fed rate cut are pushing the USD lower, providing some support to the pair. The upcoming minutes of the RBA’s August meeting and Fed Chair Jerome Powell’s speech will be key events to watch this week.
US Consumer Sentiment saw a rise for the first time in five months, with the University of Michigan Consumer Sentiment Index improving to 67.8 in August. However, US housing data showed a decline in July, with Housing Starts falling 6.8% and Building Permits decreasing 4.0%.
Markets are anticipating a Fed rate cut, with traders pricing in a 76% chance of a 25 bps cut in September. Fed Chair Powell’s speech at the Jackson Hole symposium could offer further guidance on the pace of easing. Dovish comments could put pressure on the Greenback.
On the other hand, the RBA’s hawkish stance continues to support the AUD. Governor Michele Bullock stated that the central bank is focused on potential upside risks to inflation and does not foresee any rate cuts in the near term.
Analysis:
The AUD/USD pair is currently trading near 0.6670, with the USD weakening due to positive market sentiment and expectations of a Fed rate cut. The rise in US Consumer Sentiment contrasts with declining housing data, adding uncertainty to the market outlook. Traders are pricing in a high probability of a Fed rate cut in September, with Powell’s speech likely to provide further clarity. The RBA’s hawkish stance is supporting the AUD, as Governor Bullock emphasizes the focus on inflation risks. Overall, market dynamics and central bank policies will continue to drive fluctuations in the AUD/USD pair in the coming days.