Australian Dollar hits fresh four-month highs amid USD weakness, strong Chinese inflation
The Australian Dollar (AUD) resumed its uptrend on Wednesday, with the US Dollar (USD) losing ground against its main peers despite the dismal market mood, while the rebound in Chinese inflation eased concerns about domestic demand.
The Australian Dollar (AUD) experienced a surge to fresh four-month highs due to the weakening US Dollar (USD) and strong Chinese inflation data. After reaching 0.7237 against the USD, the pair momentarily settled around 0.7220. This rise is supported by a weaker Greenback and anticipation of US Consumer Price Index (CPI) figures release on Friday.
Economists at DBS believe the upcoming CPI print will heavily influence the Federal Open Market Committee's (FOMC) decision on September interest rate hikes. Although labor market data has elevated the chances of a rate hike, it hasn't been enough to sway investors decisively. The Middle East tensions and oil price rally, including Iran's attack on US Navy vessels and Saudi Arabia's oil facilities, continue to negatively impact market sentiment.
China's August CPI data showed a 0.4% increase, surpassing expectations and alleviating concerns about weak domestic demand, a critical trade partner for Australia. The Reserve Bank of Australia (RBA) has been urged to take further action on inflation, potentially leading to rate hikes in September and November. High-interest rates, coupled with Australia's resource-rich economy and the health of its largest trading partner, China, significantly influence the AUD.
The RBA's role in setting interest rates affects the broader economy, and its primary goal is to maintain a stable 2-3% inflation rate through rate adjustments.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
