Australian Dollar appreciates amid expectations of the RBA delaying rate cuts


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  • The
    Australian
    Dollar
    gains
    ground
    due
    to
    the
    hawkish
    sentiment
    surrounding
    the
    RBA.

  • Australia’s
    Consumer
    Inflation
    Expectations
    for
    July
    posted
    a
    reading
    of
    4.3%,
    slightly
    lower
    than
    June’s
    4.4%
    reading.

  • The
    US
    Dollar
    declines
    due
    to
    the
    lower
    Treasury
    yields
    ahead
    of
    Consumer
    Price
    Index
    data
    for
    June.

The
Australian
Dollar
(AUD)
holds
gains
on
Thursday
after
the
release
of
soft
Consumer
Inflation
Expectations
for
July
by
the
Melbourne
Institute,
which
presents
consumer
expectations
for
inflation
over
the
next
12
months.

The

AUD/USD

pair
receives
support
from
increasing
expectations
that
the
Reserve
Bank
of
Australia
(RBA)
may
delay
in
the
global
rate-cutting
cycle
or
possibly
raise
interest
rates
again.
Recent
data
showed
a
decline
in
Australian
consumer
confidence
in
July,
contrasted
by
a
surge
in
business
sentiment,
reaching
a
17-month
high
in
June.

The
US
Dollar
(USD)
loses
ground,
potentially
influenced
by
the
lower
US
Treasury
yields.
Traders
are
looking
to
the
upcoming
US
Consumer
Price
Index
(CPI)
data
for
June,
due
on
Thursday,
for
further
insights
into
the
Federal
Reserve’s
(Fed)
monetary
policy
stance.

Market
forecasts
generally
predict
that
the
annualized
US
core
CPI
for
the
year
ending
in
June
will
remain
steady
at
3.4%.
Meanwhile,
headline
CPI
inflation
is
expected
to
increase
to
0.1%
month-over-month
in
June,
compared
to
the
previous
flat
reading
of
0.0%.

Daily
Digest
Market
Movers:
Australian
Dollar
improves
due
to
hawkish
sentiment
surrounding
the
RBA

  • Australia’s
    Consumer
    Inflation
    Expectations
    for
    July
    came
    in
    at
    4.3%,
    slightly
    lower
    than
    the
    previous
    reading
    of
    4.4%.
  • Federal
    Reserve
    Board
    Governor
    Lisa
    Cook
    stated
    on
    Wednesday,
    “My
    baseline
    forecast…is
    that
    inflation
    will
    continue
    to
    move
    toward
    target
    over
    time,
    without
    much
    further
    rise
    in
    unemployment,”
    according
    to
    Reuters.
  • On
    Wednesday,
    Fed
    Chair
    Jerome
    Powell
    emphasized
    the
    need
    to
    closely
    monitor
    the
    labor
    market,
    noting
    that
    it
    has
    significantly
    deteriorated.
    Additionally,
    Powell
    expressed
    confidence
    in
    the
    downward
    movement
    of
    inflation.
  • Consumer
    Price
    Index
    (CPI)
    in
    China,
    a
    close
    trade
    partner
    of
    Australia,
    rose
    at
    an
    annual
    rate
    of
    0.2%
    in
    June,
    down
    from
    a
    0.3%
    rise
    in
    May.
    The
    market
    had
    forecasted
    a
    0.4%
    increase
    for
    the
    period.
    Monthly,
    Chinese
    CPI
    inflation
    declined
    by
    0.2%
    in
    June,
    compared
    to
    a
    0.1%
    decline
    in
    May,
    which
    came
    in
    below
    the
    expected
    decline
    of
    0.1%.
  • On
    Tuesday,
    Fed
    Chair
    Jerome
    Powell
    answered
    questions
    before
    the
    Senate
    Banking
    Committee
    on
    the
    first
    day
    of
    his
    Congressional
    testimony.
    Powell
    stated,
    “More
    good
    data
    would
    strengthen
    our
    confidence
    in
    inflation.”
    He
    emphasized
    that
    a
    “policy
    rate
    cut
    is
    inappropriate
    until
    the
    Fed
    gains
    greater
    confidence
    that
    inflation
    is
    headed
    sustainably
    toward
    2%.”
    He
    also
    noted
    that
    “first-quarter
    data
    did
    not
    support
    the
    greater
    confidence
    in
    the
    inflation
    path
    that
    the
    Fed
    needs
    to
    cut
    rates.”
  • On
    Tuesday,
    Australia’s
    Westpac
    Consumer
    Confidence
    dropped
    by
    1.1%
    in
    July,
    reversing
    the
    1.7%
    increase
    seen
    in
    June.
    This
    marks
    the
    fifth
    decline
    in
    2024,
    driven
    by
    ongoing
    worries
    about
    high
    inflation,
    elevated
    interest
    rates,
    and
    a
    sluggish
    economy.

Technical
Analysis:
Australian
Dollar
maintains
position
around
0.6750

The
Australian
Dollar
trades
around
0.6750
on
Thursday.
The
Analysis
of
the
daily
chart
shows
that
the
AUD/USD
pair
consolidates
within
an
ascending
channel,
indicating
a
bullish
bias.
Additionally,
the
14-day
Relative
Strength
Index
(RSI)
remains
above
the
50
level,
confirming
the
bullish
momentum.

The
AUD/USD
pair
may
test
the
upper
boundary
of
the
ascending
channel
at
approximately
0.6785.
If
it
breaks
through
this
level,
the
pair
could
target
the
psychological
level
of
0.6800.

On
the
downside,
the
AUD/USD
pair
may
find
support
around
the
lower
boundary
of
the
ascending
channel
at
0.6675,
with
additional
support
near
the
50-day
Exponential
Moving
Average
(EMA)
at
0.6646.
A
break
below
this
level
could
push
the
pair
toward
the
throwback
support
around
0.6590.

AUD/USD:
Daily
Chart


Australian
Dollar
PRICE
Today

The
table
below
shows
the
percentage
change
of
Australian
Dollar
(AUD)
against
listed
major
currencies
today.
Australian
Dollar
was
the
strongest
against
the
Canadian
Dollar.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   -0.03% -0.03% -0.03% 0.03% -0.05% -0.08% -0.07%
EUR 0.03%   0.01% 0.02% 0.06% -0.00% -0.03% -0.03%
GBP 0.03% -0.01%   -0.02% 0.05% -0.02% -0.05% -0.02%
JPY 0.03% -0.02% 0.02%   0.04% -0.02% -0.09% -0.03%
CAD -0.03% -0.06% -0.05% -0.04%   -0.09% -0.10% -0.08%
AUD 0.05% 0.00% 0.02% 0.02% 0.09%   -0.04% -0.01%
NZD 0.08% 0.03% 0.05% 0.09% 0.10% 0.04%   0.03%
CHF 0.07% 0.03% 0.02% 0.03% 0.08% 0.00% -0.03%  

The
heat
map
shows
percentage
changes
of
major
currencies
against
each
other.
The
base
currency
is
picked
from
the
left
column,
while
the
quote
currency
is
picked
from
the
top
row.
For
example,
if
you
pick
the
Australian
Dollar
from
the
left
column
and
move
along
the
horizontal
line
to
the
US
Dollar,
the
percentage
change
displayed
in
the
box
will
represent
AUD
(base)/USD
(quote).

RBA
FAQs

The
Reserve
Bank
of
Australia
(RBA)
sets
interest
rates
and
manages
monetary
policy
for
Australia.
Decisions
are
made
by
a
board
of
governors
at
11
meetings
a
year
and
ad
hoc
emergency
meetings
as
required.
The
RBA’s
primary
mandate
is
to
maintain
price
stability,
which
means
an
inflation
rate
of
2-3%,
but
also
“..to
contribute
to
the
stability
of
the
currency,
full
employment,
and
the
economic
prosperity
and
welfare
of
the
Australian
people.”
Its
main
tool
for
achieving
this
is
by
raising
or
lowering
interest
rates.
Relatively
high
interest
rates
will
strengthen
the
Australian
Dollar
(AUD)
and
vice
versa.
Other
RBA
tools
include
quantitative
easing
and
tightening.

While
inflation
had
always
traditionally
been
thought
of
as
a
negative
factor
for
currencies
since
it
lowers
the
value
of
money
in
general,
the
opposite
has
actually
been
the
case
in
modern
times
with
the
relaxation
of
cross-border
capital
controls.
Moderately
higher
inflation
now
tends
to
lead
central
banks
to
put
up
their
interest
rates,
which
in
turn
has
the
effect
of
attracting
more
capital
inflows
from
global
investors
seeking
a
lucrative
place
to
keep
their
money.
This
increases
demand
for
the
local
currency,
which
in
the
case
of
Australia
is
the
Aussie
Dollar.

Macroeconomic
data
gauges
the
health
of
an
economy
and
can
have
an
impact
on
the
value
of
its
currency.
Investors
prefer
to
invest
their
capital
in
economies
that
are
safe
and
growing
rather
than
precarious
and
shrinking.
Greater
capital
inflows
increase
the
aggregate
demand
and
value
of
the
domestic
currency.
Classic
indicators,
such
as
GDP,
Manufacturing
and
Services
PMIs,
employment,
and
consumer
sentiment
surveys
can
influence
AUD.
A
strong
economy
may
encourage
the
Reserve
Bank
of
Australia
to
put
up
interest
rates,
also
supporting
AUD.

Quantitative
Easing
(QE)
is
a
tool
used
in
extreme
situations
when
lowering
interest
rates
is
not
enough
to
restore
the
flow
of
credit
in
the
economy.
QE
is
the
process
by
which
the
Reserve
Bank
of
Australia
(RBA)
prints
Australian
Dollars
(AUD)
for
the
purpose
of
buying
assets

usually
government
or
corporate
bonds

from
financial
institutions,
thereby
providing
them
with
much-needed
liquidity.
QE
usually
results
in
a
weaker
AUD.

Quantitative
tightening
(QT)
is
the
reverse
of
QE.
It
is
undertaken
after
QE
when
an
economic
recovery
is
underway
and
inflation
starts
rising.
Whilst
in
QE
the
Reserve
Bank
of
Australia
(RBA)
purchases
government
and
corporate
bonds
from
financial
institutions
to
provide
them
with
liquidity,
in
QT
the
RBA
stops
buying
more
assets,
and
stops
reinvesting
the
principal
maturing
on
the
bonds
it
already
holds.
It
would
be
positive
(or
bullish)
for
the
Australian
Dollar.