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Australian dollar firms above 0.7050 despite weak local catalysts
The Aussie held above 0.7050, rising about 0.15% on the day, even as traders face an RBA decision Tuesday widely expected to be a hold at 4.35%.
The Australian dollar strengthened while trading in a narrow range, holding above 0.7050 and easing about 0.15% intraday, which FXStreet said marks the tightest daily movement in weeks. The move follows a broader run of nearly 200 pips off a late-June trough just above 0.6850, with the 50-day EMA around 0.7000 reclaimed and flattening beneath price.
FXStreet said the positioning looks inconsistent because domestic drivers tied to rate expectations have deteriorated over the same period. It pointed to Tuesday's Reserve Bank of Australia decision, where the consensus call is for no change at 4.35%, alongside an inflation release and an external disinflation signal from China.
The article cited RBA expectations of a 4.35% rate, noting a Reuters poll of 37 economists produced no forecasts for anything else. It also said market-implied odds of an increase are in low single digits, down from a live possibility three weeks earlier after the June-quarter trimmed mean came in at 3.6%, below expectations.
FXStreet added that China's July inflation data also moved in the same direction, with consumer prices falling 0.1% month over month versus a 0.2% consensus and the annual rate slowing to 0.5% from 1.0%. Producer prices decelerated to 3.5% year over year from 4.1%, and the piece said iron ore has stayed below $100 per tonne through the summer.