The AUD/USD pair has renewed its seven-month highs above 0.6800 after Australian Consumer Price Index (CPI) data came in stronger than expected. This move comes as the US Dollar recovers amid deteriorating risk sentiment.
The latest CPI data from Australia showed a 3.5% year-over-year growth, surpassing the estimated 3.4% increase and June’s 3.8% acceleration. This unexpected increase has reignited expectations of further interest rate hikes by the Reserve Bank of Australia (RBA), fueling a rally in the Australian Dollar.
However, the market remains cautious ahead of Nvidia’s earnings report and speeches from US Federal Reserve officials, which could provide insights into the upcoming rate cut in September. This uncertainty has limited the gains in the AUD/USD pair.
Technical Analysis and Outlook
Technically, the AUD/USD pair is poised for more upside, with the 14-day Relative Strength Index (RSI) pointing upwards above the 50 level. Additionally, bullish crossovers on the daily chart signal a positive outlook for the pair.
Key Factors Driving the Australian Dollar (AUD)
Several factors influence the value of the Australian Dollar (AUD), including:
- The level of interest rates set by the Reserve Bank of Australia (RBA)
- The price of Australia’s largest export, Iron Ore
- The health of the Chinese economy, Australia’s largest trading partner
- Inflation, growth rate, and Trade Balance in Australia
- Market sentiment and risk-on/risk-off dynamics
Understanding these factors can help investors make informed decisions when trading the AUD/USD pair.