Aussie Dollar slips below 0.70 as Bullock dovishness trumps soft PCE
The Aussie Dollar posted losses of 0.57% against the US Dollar on Wednesday, even though US data trimmed hawkish bets on the Federal Reserve, while the dovish tilt of RBA’s Governor Michele Bullock weighed on the antipodean.
On Wednesday, the Australian Dollar (AUD) slipped below the 0.70 mark against the US Dollar (USD) as dovish comments from the Reserve Bank of Australia (RBA) took precedence over softer US consumer data. The AUD/USD rate reached a peak of 0.6995 but subsequently settled at 0.6947. In August, the US Personal Consumption Expenditure (PCE) Price Index rose by 3.4% year-over-year (YoY), falling short of the anticipated 3.7% increase and remaining unchanged from the previous month.
The Core PCE, which excludes volatile items, remained steady at 3% YoY, below the estimated 3.3% rise. US GDP grew from 1.5% quarter-over-quarter (QoQ) to 2.2% QoQ, surpassing estimates and demonstrating the resilience of the economy. US inflation data weakened hawkish expectations of a Federal Reserve rate hike in October, with money markets now forecasting a 61% chance of a hold.
Despite this, the AUD/USD experienced a downward trend due to RBA Governor Michele Bullock's assertion that "no further rate hikes may be needed if inflation declines." ANZ analysts projected that the August Consumer Price Index (CPI) would support their forecast for a 1.0% quarterly change in Q3, believing another rate hike at the November meeting to be probable.
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