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Australian dollar rises as RBA minutes turn hawkish and the dollar softens
AUD/USD was quoted at 0.7163 after rebounding from 0.7137 lows, as US data came in mixed and investors looked ahead to Australia’s CPI and the Fed’s core PCE gauge.
The Australian dollar rose more than 0.20% on Tuesday, helped by a softer Greenback and Reserve Bank of Australia last-meeting minutes that indicated policymakers were close to raising rates, according to FXStreet.
At the time of writing, AUD/USD traded around 0.7163 after bouncing off daily lows near 0.7137. US economic releases were mixed, with Conference Board consumer confidence falling to 89.4 in August, the lowest in seven months, while building permits for July improved after June’s contraction but missed expectations.
In Australia, markets are preparing for July CPI, with FXStreet citing expectations for headline inflation to slow to 3.2% year over year from 3.8%, and the Trimmed Mean CPI to ease to 3.5% year over year from 3.6%. FXStreet also noted that money markets expect the RBA to hold rates unchanged through year end, even as rate futures priced in limited tightening for December.
FXStreet added that the US docket ahead includes the Federal Reserve’s preferred inflation measure, the Core PCE Price Index, along with durable goods orders, GDP, and initial jobless claims, with attention later shifting to a speech by Fed Chair Kevin Warsh at Jackson Hole. Separate from FX, the outlet said oil prices fell by more than 5% after a Middle East related ceasefire report.
FXStreet said the RBA minutes showed a focus on inflation and upside inflation risks, and highlighted comments from Boston Fed President Susan Collins that inflation remains high while the economy expands near-trend and the jobs market is consistent with full employment.