Key Points:
The Australian dollar managed to extend its rally into a fourth session on Wednesday, gaining ground as the U.S. dollar paused its recent ascent.
The greenback’s momentum eased as traders awaited clarity on President-elect Donald Trump’s cabinet choices and the likelihood of his proposed fiscal and tariff policies being implemented.
The Australian dollar edged up 0.2% to $0.6529, consolidating after earlier gains and moving further from its recent low of $0.6448.
Resistance now lies at $0.6540 and $0.6600, with traders closely monitoring upcoming inflation data for October, which is expected to provide further directional cues.
Picture: The AUD/USD pair edges higher to 0.6529, supported by bullish momentum, with minor pullbacks near resistance, as seen on the VT Markets app.
Minutes from the Reserve Bank of Australia’s (RBA) last meeting revealed that the central bank remains vigilant about inflation risks, maintaining a hawkish tone compared to global peers.
However, analysts at JPMorgan expect a dovish pivot in the coming months, with a potential rate cut in February contingent on economic data.
Market expectations reflect this uncertainty, with only a 37% probability of a rate cut in February and a stronger 58% chance of easing by April.
The consumer price index report due on 27 November will be pivotal, with trimmed mean core inflation projected to hover near the upper end of the RBA’s 2-3% target band.
The easing of the U.S. dollar rally, triggered by profit-taking and speculation over President-elect Trump’s fiscal policies, has provided breathing room for the AUD and NZD.
See also: Week Ahead: Inflation Dilemma and Rate Cuts
This pause in dollar strength offers support for both currencies, but further upside will depend on domestic data and central bank decisions.
Both currencies remain sensitive to shifts in global risk sentiment, U.S. dollar movements, and local economic data, making the coming weeks crucial for their trajectories.
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