Skip to content AUDUSD Fundamental Analysis – 6-June-2024
AUD/USD—The Australian dollar remained steady above $0.665, buoyed by better-than-anticipated domestic economic data. Australia’s economy grew by 0.1% in the first quarter, a slowdown from the previous quarter’s 0.3% rise and below market forecasts of 0.2%. Despite missing expectations, investors were relieved as the economy narrowly avoided a contraction.
This performance indicates that while growth has slowed, the economy is not in decline. As a result, there is almost no expectation that the Reserve Bank of Australia (RBA) will ease policy this year. The likelihood of a policy change in December is currently seen as 44%.
RBA Ready to Act on Inflation
RBA Governor Michele Bullock has stated that the bank is prepared to take action if inflation persists but mentioned that the risks associated with rates and inflation are currently balanced. She also noted a softening labor market and recognized the modest GDP growth.
The Australian dollar gained strength from a weakening US dollar on the international front. This decline in the US dollar is driven by increasing speculation that the Federal Reserve will implement two rate cuts this year.
Summary
In summary, while Australia’s economic growth has slowed, it has not contracted, providing stability to the Australian dollar. Investors should remain aware of the balanced risks and the potential actions the RBA may take in response to inflation and labor market changes.
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