Is It Time for the AUD to Take Revenge on the US Dollar?
The Australian dollar (AUD) strengthened against the US dollar (USD) on Friday after weakening for two consecutive days. This strengthening came after the release of solid preliminary S&P Australia Global PMI data. The Manufacturing PMI rose to 51.6 from 49.7, while the Services PMI strengthened to 52.7 and the Composite PMI rose to 52.6. A reading above 50 indicates expanding business activity, signaling that the Australian economy remains relatively healthy.
Positive sentiment towards the AUD is also supported by expectations that the Reserve Bank of Australia (RBA) will remain cautious and likely hold interest rates for a while longer, as long as economic data remains favorable. The minutes of the RBA's November meeting indicated that they would not rush to change policy if the economy performs better than expected. This stance has led the market to view the Aussie as having relatively strong fundamentals compared to before.
RBA Assistant Governor Sarah Hunter warned that excessively fast economic growth could trigger inflationary pressures, and emphasized that the RBA would not overreact solely to volatile monthly inflation data. In the futures market, the ASX 30-day cash rate contract for December 2025 reflects only an approximately 8% chance of a rate cut from 3.60% to 3.35%. This means the market is not yet fully convinced the RBA will cut rates soon, and this has contributed to the strengthening of the AUD. (az)
Source: Newsmaker.id
