Skip to content AUDUSD Fundamental Analysis – 13-September-2024
The Australian dollar rose above $0.671 (AUD/USD), reaching its highest point in a week, thanks to a surge in global risk assets that improved market confidence. When investors feel more optimistic, they are willing to take risks, which often benefits currencies like the Australian dollar.
Strong Commodity Prices Support the Aussie
Australia exports essential resources like iron ore, gold, and oil. The rise in prices for these goods further boosted the Australian dollar. As a country that relies on exporting these commodities, more substantial prices help its currency gain value.
Reserve Bank of Australia’s Hawkish Stand
The Reserve Bank of Australia (RBA) is still taking a firm stance on interest rates. According to RBA Governor Michele Bullock, it’s too early to consider lowering rates because inflation remains a concern.
She emphasized that inflation is still higher than desired, so keeping rates steady is necessary. Meanwhile, RBA Assistant Governor Sarah Hunter also pointed out that although the job market remains strong, wage growth seems to be slowing down after reaching its peak.
US Dollar Weakness Adds to Australian Dollar’s Gains
The Australian dollar also benefited from a weaker US dollar. Investors expect the Federal Reserve to reduce interest rates by 50 basis points soon, which has put pressure on the US dollar, making other currencies like the Aussie more attractive to investors.
Conclusion
More substantial commodity prices, a risk-friendly market environment, and expectations of lower US interest rates supported the Australian dollar’s rise.
While inflation remains a key concern for the Reserve Bank of Australia, favorable conditions in the short term make the outlook for the Australian dollar appear favorable.
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