Skip to content AUDUSD Fundamental Analysis – 5-September-2024
The Australian dollar remained stable, above $0.672 (AUD/USD), after the Reserve Bank of Australia (RBA) decided not to change interest rates in its August meeting.
RBA Governor Michele Bullock explained that the decision was made because inflation is still too high, but the central bank is committed to lowering it to the target range of 2-3%. Source FxNews.
Balancing Inflation and Job Market Growth
While tackling inflation is a priority, Bullock highlighted that the RBA aims to protect the country’s substantial job market gains. The central bank must strike a balance between these two goals, as both are important for Australia’s long-term economic health.
Trade Surplus Hits a New High
Investors are also reacting to positive trade data, which showed that Australia’s trade surplus reached a five-month high in July. This increase was driven by a rise in exports, while imports dropped, adding more strength to the Australian economy.
Economic Growth Slower Than Expected
Earlier this week, data revealed that Australia’s economy grew by 0.2% during the second quarter of 2023. This marked the third consecutive quarter of steady growth, although the figure fell short of the expected 0.3%.
Even though the growth rate was slightly lower than predicted, the economy is still moving positively.
Impact of Global Economic Trends on the Aussie Dollar
Outside of Australia, global factors also played a role in supporting the Aussie dollar. A drop in the value of the US dollar, caused by weak US economic data, fueled concerns about a possible recession in the United States.
This, in turn, led to speculation that the US Federal Reserve might need to cut interest rates more aggressively, which boosted the Australian dollar.
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