AUD/USD is growing on inflation data

01/27/2023

1 minute read

2023.01.27 03:49

Budrigannews.com – With substantial gains on Wednesday, the Australian dollar has extended its rally. In the North American session, it is trading at 0.7080, up 0.51 percent.

Australia’s saw a sharp rise in the fourth quarter, so it’s safe to assume that RBA policymakers are having a rough day at work. CPI increased to 8.4%, above the consensus of 7.7%, from 7.3% in Q3. Hopes that inflation has reached its peak will be dashed by the hot inflation report, and there is little doubt that the RBA will need to keep raising rates. The markets had priced in a peak rate of 3.6 percent; however, with the cash rate currently at 3.1 percent and upcoming rate hikes, it appears that the market underestimates the terminal rate.

After the CPI report, the Australian dollar rose by about 1% as a result of the inflation release, reaching a five-month high. However, the Australian dollar has lost much of those gains. The Australian’s prospects are looking better for a number of reasons. Commodity prices are strong, the RBA will almost certainly keep raising rates over the next few months, and China’s reopening will increase demand for Australian exports.

While there were no significant US releases today, Thursday’s data calendar includes and. GDP growth is anticipated to slow to 2.8 percent, down from 3.2 percent in Q3, but still respectable.

As high rates have slowed economic growth, US PMIs on Wednesday indicated a decline in the and sectors, indicating cracks in the US economy.

The expectation that the Fed will ease up on rate policy in response to the economy’s slowdown has put pressure on the.

The US dollar would likely benefit from a reading of GDP that was higher than anticipated, while a reading of GDP that was lower than expected would likely cause the currency to fall.