RBA Tightens, AUD Ready to Rebound!
The Australian dollar (AUD) weakened against the US dollar (USD) on Tuesday after two days of gains. Support for the USD emerged from hopes that the US government shutdown was approaching, leading to a recovery in market interest in the greenback. However, the AUD's outlook hasn't completely faded, as the RBA's prudent (tending to tight) policy stance could act as a buffer.
Domestically, Westpac Consumer Confidence jumped +12.8% to 103.8 in November, the first time it has risen above 100 since February 2022, marking the strongest non-pandemic surge in seven years. The NAB survey also showed Business Conditions rising to 9 (from 8), supported by stronger sales and profits, while Business Confidence fell slightly to 6.
RBA Deputy Governor Andrew Hauser emphasized that the current policy challenges are "unusual" and believes Australia needs to maintain tight monetary conditions to reduce inflation. He called this phase complex: the economic recovery begins when demand already exceeds capacity, so there is limited room for easing in the near term.
Looking ahead, the AUD could rebound if the RBA's tone remains hawkish and domestic data is solid. However, a strengthening USD due to news of the US shutdown ending and movements in Treasury yields could hinder the AUD's recovery. In short: Australia's fundamentals are improving, but the direction of the AUD/USD pair remains determined by the tug-of-war between a tight RBA and pro-USD global sentiment. (asd)
Source: Newsmaker.id
