Australian Dollar benefits from the hawkish sentiment around the RBA.

The Australian Dollar (AUD) has recovered its recent losses against the US Dollar (USD), owing to hawkish attitude surrounding the Reserve Bank of Australia (RBA). The RBA Governor, Michele Bullock, warned last week that it is too early to consider rate decreases. The board does not foresee being able to cut rates in the near future.

China’s Consumer Price Index increased by 0.6% year on year in August, up from 0.5% in July but below the market forecast of 0.7%.

The Australian dollar remains sturdy notwithstanding the lower inflation statistics given by China on Monday. China’s Consumer Price Index (CPI) increased by 0.6% year on year in August, up from 0.5% in July but lower than the market consensus of 0.7%. On a monthly basis, CPI inflation rose by 0.4% in August, down from 0.5% in July and below the 0.5% forecast. Given Australia and China’s tight trading ties, changes in the Chinese economy could have a big impact on Australian markets.

US dollar supported by growing skepticism about the possibility of an abrupt Fed rate drop in September.

The US Dollar strengthened after Friday’s US economic data raised doubts about the Federal Reserve’s (Fed) possibility of cutting interest rates aggressively at its September meeting.

According to the CME FedWatch Tool, markets are fully expecting at least a 25 basis point (bps) The Federal Reserve reduced rates at its September meeting. The possibility of a 50 basis point rate drop has decreased to 29.0%, from 30.0% a week ago.

Daily Market Movers: Australian Dollar Edges Higher Due To Hawkish RBA.

RBC Capital Markets now anticipates the Reserve Bank of Australia to decrease interest rates at its February 2025 meeting, rather than in May 2025. Despite the fact that inflation in Australia remains over the RBA objective, slowing economic growth is not deemed a sufficient justification to cut interest rates this year.
The US Bureau of Labor Statistics (BLS) stated that Nonfarm Payrolls (NFP) added 142,000 jobs in August, lower than the projection of 160,000 but an improvement from July’s downwardly revised result of 89,000. Meanwhile, the unemployment rate decreased to 4.2%, as projected, from 4.3% the previous month.
According to CNBC, Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee stated on Friday that Fed officials are beginning to align with the broader market’s belief that the US central bank would raise interest rates soon. FXStreet’s FedTracker, which employs a custom AI algorithm to evaluate Fed officials’ statements on a dovish-to-hawkish scale of 0 to 10, gave Goolsbee’s views a 3.2.

ADP Employment Change reported on Thursday that private-sector employment climbed by 99,000 in August.

ADP Employment Change reported on Thursday that private-sector employment climbed by 99,000 in August, following a 111,000 increase in July but falling short of the projection of 145,000. Meanwhile, the weekly US initial jobless claims increased to 227,000 for the Week ending August 30, compared to the prior reading of 232,000 and lower than the initial consensus of 230,000.
Australia’s trade surplus increased to 6,009 million MoM in July, above the predicted 5,150 million and 5,589 million in the previous reading.
US JOLTS Job Openings fell to 7.673 million in July, down from 7.910 million in June, the lowest level since January 2021 and below market forecasts of 8.10 million.
Bank of America (BoA) has reduced its China economic growth forecast, decreasing it to 4.8% in 2024 from 5.0% previously. The prediction for 2025 has been lowered to 4.5% growth, while the outlook for 2026 remains at 4.5%.
In the second quarter, Australia’s Gross Domestic Product (GDP) increased by 0.2% from the previous quarter.
, an increase over the previous quarter’s 0.1% but less than the predicted 0.3%.