Australian dollar extends its gains as the RBA delays rate reduction due to stubbornly rising inflation.

The Australian Dollar (AUD) rise for the fourth consecutive day on Friday. This upward trend could be ascribed to consistently rising inflation, which has prompted the Reserve Bank of Australia (RBA) to postpone possible rate reduction.

RBA’s meeting minutes, the Consumer Price Index (CPI) for May is likely to rise.

The RBA’s June Meeting Minutes stated that the “board judged the case for holding rates steady stronger than hiking.” The board highlighted the need to stay attentive over upside risks to inflation, stressing that data showed an upward risk for May’s Consumer Price Index (CPI).

The US Dollar is under pressure as lower US data raises predictions that the Fed would cut interest rates in 2024.

The AUDUSD pair also benefits from a weaker US dollar. The greenback is struggling due to poor economic statistics from the United States (US), which has fueled speculation that the Federal Reserve (Fed) would lower interest rates in 2024. The recovery in US Treasury yields could limit the US dollar’s fall.

Daily Market Movers: Australian Dollar Appreciates due to aggressive RBA.

According to the Australian Bureau of Statistics on Thursday, Australia’s trade surplus for May was A$5,773 million ($3,868 million), less than the expected A$6,678 million and lower than the previous estimate of A$6,548 million.

In May, Australia’s Retail Sales, a measure of the country’s consumer expenditure, climbed by 0.6% month on month the prior month’s 0.1% increase. This statistic beat the market’s estimate of a 0.2% gain.
Judo Bank’s Australia Services PMI rose to 51.2 MoM from 51.0 the previous month, outperforming expectations of a decrease to 50.6. Meanwhile, the Composite PMI increased to 50.7 MoM from 50.6 in the prior month.
China’s Services Purchasing Managers’ Index (PMI) decreased from 54.0 in May to 51.2 in June, according to the most recent Caixin data issued on Wednesday. The market expected a 53.4 figure throughout the reporting period.

US ISM Services PMI fell dramatically to 48.8 in June.

The US ISM Services PMI fell dramatically to 48.8 in June, the largest drop since April 2020. This data fell far below market forecasts of 52.5, following a reading of 53.8 in May.
The ADP Employment report revealed that In June, US private enterprises added 150,000 employees to their payrolls, the lowest increase in five months. This amount fell short of the projected 160,000 and was lower than the downwardly revised 157,000 in May.
On Wednesday, Federal Reserve Bank of Chicago President Austan Goolsbee told BBC Radio that bringing inflation back to 2% will take time and that additional economic statistics are needed. However, Fed Chair Jerome Powell stated on Tuesday that the central bank is returning to a disinflationary path, according to Reuters.

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