Aussie Dollar Strengthens with US Rate Cut Bets

The Australian dollar recently climbed above $0.67 (AUD/USD), reaching four-month highs. This surge was driven by fresh economic stimulus in China and growing expectations of US interest rate cuts. These factors boosted commodity prices and lifted sentiment in Australian markets.

China’s Stimulus Boosts Markets

Last week, China introduced a broad support package for its struggling property market. This included relaxing mortgage rules and urging local governments to buy unsold homes. These measures have helped improve the outlook for commodities, a key part of Australia’s export economy.

Domestic Market Outlook

Domestically, investors are closely watching the Reserve Bank of Australia’s (RBA) latest policy meeting minutes for hints on the future path of interest rates. Recent data has shown that Australia’s unemployment rate rose more than expected in April, increasing to 4.1% from 3.8% in March.

Additionally, wage growth in the first quarter was slower than anticipated, leading markets to dismiss the possibility of further interest rate hikes by the RBA.

Economic Data and Investor Sentiment

The unemployment rate and slower wage growth increase have mixed implications for the Australian economy. On one hand, these factors suggest a cooling labor market, which could reduce inflationary pressures.

On the other hand, they may indicate a slowing economy, which could affect future growth prospects. Investors will look to the RBA’s policy meeting minutes for more clarity on these issues.

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