AUDUSD Fundamental Analysis – 13-August-2024

The Australian dollar is inching closer to $0.659 (AUD/USD), reaching its highest point in three weeks as optimism grows. Investors are responding to a series of mostly positive economic reports from Australia.

One notable development is the sharp rebound in consumer confidence during August, mainly driven by tax cuts that boosted public sentiment. However, this optimism is tempered by ongoing concerns about the Reserve Bank of Australia’s (RBA) strict stance on inflation.

Consumer Confidence Bounces Back

In August, Australian consumer confidence saw a significant uptick, mainly due to the impact of recent tax cuts. These cuts have put more money in people’s pockets, lifting their spirits. Despite this, there is still some caution, mainly because of worries about the RBA’s potential actions to control inflation.

The central bank’s hawkish approach has made some people wary, even as they feel more optimistic about the economy.

Business Confidence and Wage Growth: A Mixed Bag

The business sector is also improving, with confidence levels rising in July. However, the news isn’t all positive. Wages in Australia grew at a slower pace than expected in the second quarter, which could signal underlying challenges in the economy.

This slower wage growth might mean that not everyone benefits equally from the economic recovery.

• Also read: GBPUSD Fundamental Analysis – 13-August-2024

RBA’s Stance on Interest Rates and Inflation

Last week, RBA Governor Michele Bullock clarified that the central bank is ready to raise interest rates again to tackle inflation. She emphasized that Australia’s economic future is still very uncertain and that the RBA must remain alert to any potential increases in inflation.

This warning came just after the RBA decided to keep the cash rate steady at 4.35% for the sixth consecutive meeting, a move that was widely expected by the market.

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