AUD Under Pressure Again, Why Is 0.6700 So Hard to Break?
AUD/USD weakened again and fell below 0.6700 during Thursday's Asian session, hovering around 0.6680. Pressure arose after Australian consumer inflation expectations edged down to 4.6% in January from 4.7% previously, a sign that perceptions of rising prices are easing.
On the policy front, the Reserve Bank of Australia (RBA) kept interest rates on hold at 3.6% at its December meeting for the third time. Inflation has indeed eased from its 2022 peak, but remains above the RBA's 2-3% target. Australia's headline inflation rate was 3.4% (YoY) in November, the lowest level since August, but not yet "safe" enough to warrant a swift change in the central bank's stance.
Meanwhile, in the United States, retail data supported the dollar. US retail sales rose 0.6% in November to US$735.9 billion, beating expectations and improving from October's contraction. Consumption activity remains strong, leading the market to believe the US economy remains resilient.
On the producer inflation front, the US Consumer Price Index (PPI) is also relatively strong, with annual headline and core inflation hovering around 3%. The combination of solid consumption and producer-side price pressures has further strengthened the market's confidence that the Fed won't need to rush into policy easing, thus supporting the dollar.
Looking ahead, market attention will be focused on US initial jobless claims data and comments from Fed officials. With US unemployment falling to 4.4% in December, several market participants have postponed their projections for an interest rate cut—some investment banks have even shifted their expectations for a cut to mid-year. As long as the "US interest rates will stay on hold for longer" narrative remains dominant, the AUD will likely struggle to strengthen significantly.
Key Points:
- AUD/USD fell again to around 0.6680 and failed to hold above 0.6700.
- Australian consumer inflation expectations fell slightly to 4.6% (Jan).
- The RBA maintained its cash rate at 3.6%; Australian inflation remains above its 2–3% target.
- US retail sales rose 0.6% (Nov), strengthening the dollar.
- Strong US data boosted expectations that the Fed would hold interest rates longer, pressuring the AUD. (asd)
Source: Newsmaker.id
