Skip to content AUDUSD Fundamental Analysis – 14-August-2024
The Australian dollar recently hovered around $0.662 (AUD/USD), marking its highest point in three weeks. This gain was primarily driven by a weakening US dollar, following lower-than-expected inflation figures from US producers.
These figures have increased speculation that the Federal Reserve may move towards more significant interest rate cuts.
Aussie Gains Ground Against the Kiwi
In addition to its strength against the US dollar, the Australian dollar also gained momentum against the New Zealand dollar. This movement came after the Reserve Bank of New Zealand cut its cash rate by 25 basis points, bringing it down to 5.25%.
This marked the first rate reduction by the RBNZ since March 2020, catching many market observers off guard.
Domestic Factors Influencing the Australian Dollar
On the domestic front, recent data supported the Australian dollar. Consumer confidence in Australia saw a notable rebound in August, mainly due to tax cuts that lifted the public’s mood.
However, this optimism was somewhat tempered by ongoing concerns about the Reserve Bank of Australia’s potential for further interest rate hikes, which have kept overall sentiment cautious. Additionally, business confidence increased in July, although wage growth in the second quarter fell short of expectations.
RBA’s Stance on Future Rate Hikes
The Reserve Bank of Australia remains vigilant about inflation. Last week, RBA Governor Michele Bullock emphasized the central bank’s readiness to raise interest rates again to combat inflationary pressures.
This assertive stance has kept financial markets on edge, with investors closely watching for any signals of future policy changes.
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