AUDUSD Fundamental Analysis Forex Fundamental Analysis

AUDUSD Fundamental Analysis – 29-July-2024

July 29, 2024

The Australian dollar has climbed above $0.654, recovering from a 12-week low. This rebound is fueled by investor anticipation of upcoming domestic inflation figures, which could provide crucial insights into the Reserve Bank of Australia’s (RBA) future monetary policy.

Understanding these economic indicators helps investors make informed decisions in a volatile market.

AUDUSD Fundamental Analysis - 29-July-2024 — AUDUSD Fundamental Analysis – 29-July-2024

Anticipated Inflation Figures

Analysts predict a slight uptick in Australia’s headline inflation for the second quarter, with the core inflation rate likely to remain steady at around 4%. These figures are critical as they influence the RBA’s decisions on interest rates.

A higher inflation rate often prompts central banks to increase interest rates to cool down the economy, affecting borrowing costs and investment strategies.

Speculations on Interest Rate Movements

The market sees a 20% chance that the RBA will raise interest rates in August. This speculation is part of a broader global context where traders consider potential interest rate hikes from the Bank of Japan.

In contrast, the Federal Reserve and the Bank of England are expected to signal a possible monetary policy easing. These differing approaches highlight major economies’ varied economic conditions and policy responses.

Recent Performance of the Aussie Dollar

Despite the recent rebound, the Australian dollar experienced a more than 3% decline over the past two weeks. This drop was driven by a global selloff in risk assets, the unwinding of carry trades against the yen, and a weak economic outlook in China, Australia’s top trading partner.

These factors underscore the complex interplay of global market dynamics impacting the Australian dollar.

Also Read: EURUSD Fundamental Analysis – 29-July-2024