AUDUSD Fundamental Analysis – 7-June-2024

AUD/USD—The Australian dollar steadied around $0.6665, 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. Although this marks a slowdown from the 0.3% rise in the previous quarter and missed the market forecast of 0.2%, it was still a relief for investors worried about a possible contraction.

RBA Unlikely to Ease Policy in 2024

Despite the slower growth, the Reserve Bank of Australia (RBA) is unlikely to ease monetary policy this year, with only a 44% chance of a move in December. RBA Governor Michele Bullock emphasized the central bank’s readiness to act if inflation remains high.

However, she also pointed out that current interest rates and inflation risks are balanced. Additionally, Bullock noted some easing in the labor market and acknowledged the GDP growth rate was relatively low.

Australian Dollar Rises Amid US Rate Cut Expectations

On the international front, the Australian dollar gained some advantage due to a decline in the US dollar, fueled by expectations of two rate cuts by the Federal Reserve this year. This interplay between domestic stability and external influences highlights the complexities of currency valuation, guiding investors and policymakers in making informed decisions.

Summary

Understanding these dynamics helps investors navigate the economic landscape, ensuring they are better prepared for potential changes in monetary policy and global market shifts.

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