AUDUSD Fundamental Analysis – 5-June-2024

The Australian dollar steadied above $0.665 (AUD/USD), finding support as domestic economic data proved less disappointing than markets feared. Recent figures revealed that Australia’s economy grew by 0.1% in the first quarter, down from a 0.3% increase in the previous quarter and missing market expectations of 0.2%.

While this slowdown is notable, it was a relief for investors that the economy avoided a contraction.

RBA Unlikely to Ease Policy in 2024

The Reserve Bank of Australia (RBA) is not expected to ease its monetary policy this year, with the likelihood of a policy change in December at just 44%. RBA Governor Michele Bullock emphasized that the central bank is prepared to take action if inflation remains persistently high.

However, she also pointed out that current risks to interest rates and inflation are balanced, indicating no immediate cause for drastic measures.

Australia Labor Market Easing Signals Hope

Governor Bullock also mentioned that the labor market shows signs of easing across several metrics, which could influence future policy decisions. The modest GDP growth reflects broader economic challenges, but avoiding a contraction offers reassurance.

Summary

These developments suggest a cautious yet stable outlook for those monitoring the Australian economy. The RBA’s stance on inflation and employment trends will be key factors to watch in the coming months. Understanding these dynamics can help investors and businesses make more informed decisions.

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