The AUD/USD pair is showing strength around 0.6790 in Thursday’s early Asian session, driven by the hotter-than-expected Australian CPI inflation data. This data has pushed back expectations of a rate cut by the Reserve Bank of Australia (RBA) and provided support to the Aussie.
In the second quarter (Q2), Australia’s private capital spending dropped by 2.2%, compared to a 1.0% increase in the previous quarter. This figure was weaker than the estimated 1.0%, with spending on buildings and structures decreasing by 3.8% and plant and machinery declining by 0.5%.
The Australian inflation data on Wednesday was not enough to trigger RBA rate cut expectations, leading to the AUD gaining against the USD. With the focus now shifting to Australian Retail Sales data due on Friday, investors are keen to see how the market will react.
Meanwhile, the US Federal Reserve’s indication of lower interest rates in the near future is putting pressure on the USD. Fed Chair Jerome Powell’s statement at Jackson Hole last week about the need for policy adjustment has further fueled expectations of a rate cut. The upcoming US GDP growth numbers for the second quarter are forecasted to expand by 2.8% and will be closely monitored by traders.
Australian Dollar FAQs
For those looking to understand the factors influencing the Australian Dollar (AUD), it’s essential to consider the level of interest rates set by the RBA, the price of Iron Ore (Australia’s biggest export), the health of the Chinese economy (Australia’s largest trading partner), inflation rates, growth rate, Trade Balance, and market sentiment. These factors collectively determine the value and movement of the AUD in the forex market.