Australian Dollar Strengthens
The Australian dollar strengthened against the US dollar on Friday, extending its gains for the second consecutive day. This strengthening occurred as the US dollar remained under pressure, as market expectations grew that the Federal Reserve could cut interest rates after US inflation data for November fell below expectations. US CPI inflation was recorded at 2.7%, while core CPI rose 2.6%—both below expectations, providing support for AUD/USD.
Domestically in Australia, sentiment towards the AUD was also helped by a more cautious investor attitude following the release of Consumer Inflation Expectations, which rose to 4.7% in December, from 4.5% in November. This figure reinforces the view that the Reserve Bank of Australia (RBA) still has reason to maintain its hawkish stance on interest rate policy.
Furthermore, credit data showed that financing activity remained strong. Australian Private Sector Credit rose 0.6% (MoM) in November, beating the 0.2% forecast, although slower than the 0.7% increase in October. On an annual basis, credit growth edged up to 7.4% (YoY) from 7.3%, the fastest pace since January 2023—providing additional support for the Australian dollar. (asd)
Source: Bloomberg.com
