Australian dollar is hovering near a key level ahead of the US PPI and Fed policy announcement.

The Australian Dollar (AUD) fell further on Wednesday, especially after the United States (US) released mild Consumer Price Index (CPI) data. The AUDUSD pair experienced considerable volatility in the previous session, dropping somewhat after briefly exceeding the 0.6600 mark. Participants in the market are The US Producer Price Index (PPI) and the Federal Reserve’s (Fed) Interest Rate Decision will be released later in the North American session.

The Australian government expects a much stronger budget bottom line this year as revenues exceed expectations. Labor Treasurer Jim Chalmers’ mid-year economic and fiscal outlook (MYEFO) forecasts a budget deficit of about AUD 1.1 billion (USD 721.4 million) in the fiscal year ending June 2024, down from the AUD 13.9 billion expected in May. To avoid worsening inflationary pressures, the administration is resisting proposals for increased cost-of-living assistance.

The US Dollar Index (DXY) is attempting to recoup recent losses as US Treasury yields fall. The DXY has fallen as a result of the Federal Open Market Committee’s decision. (FOMC) expected no changes in its most recent policy decision. According to the Consumer Price Index (CPI), inflation in the United States fell as expected in November. Investors will likely pay close attention to Fed Chair Jerome Powell’s remarks for clues about future rate hikes in the coming year.

Daily Market Movers: The Australian Dollar falls amid hawkish sentiment. RBA

Roy Morgan-ANZ The Australian Consumer Confidence weekly poll increased to 80.8 from 76.4 the previous week.

Westpac Consumer Confidence increased by 2.7% in December, following a 2.6% fall in November.

Furthermore National Australia Bank Business Confidence, which surveys current business conditions in Australia and provides insights into the broader economy’s short-term performance, fell to 9 from 2 the previous month.

Michele, Governor of the RBA Bullock was upbeat, saying, “Don’t think we’re falling behind in the inflation fight.” Bullock stressed the importance of being careful and regularly monitoring data, as well as the RBA’s commitment to preserving employment increases.

Moreover The US Bureau of Labor Statistics said on Tuesday that the November Consumer Price Index (CPI) increased by 0.1% month on month and 3.1% year on year. Both statistics were in line with market expectations, indicating that inflation was on track.

The US Core CPI, which excludes volatile food and energy costs, increased by 0.3% month on month and 4.0% year on year, as expected.