AUD/USD continues to rise after US core PCE numbers

• AUD/USD continues to rise after US core PCE came in higher than expected.
• The lack of reaction may be because the US dollar is already factoring in Thursday's GDP data.
• Rising inflation in Australian factories during added a tailwind to AUD/USD.

AUD/USD is trading at 0.6540 and continues to rise following the release of the US Personal Consumption Expenditure (PCE) Price Index for March. Despite data showing a higher-than-expected inflation rate, the US Dollar (USD) is showing little reaction across most pairs, including AUD/USD, which looks set to post its fifth consecutive daily rise assuming a close bullish on Friday.

He PCE The US core was at 2.8% annually in March, above the expected 2.6% and the same as the previous 2.8%, while the headline PCE rose 2.7%, above the expected 2.6% and 2.5% former. In monthly terms, the PCE data was in line with expectations.

The US dollar's lack of reaction could be due to the fact that GDP inflation data for the first quarter had already been taken into account on Thursday, which was ahead of core PCE inflation data.

Although the pace of U.S. GDP growth slowed in the first quarter, the price index component of GDP, which measures goods inflation, rose much higher than before. Following this data, the US Dollar strengthened across most pairs and the AUD/USD pair pared its earlier gains, falling to a low of 0.6486 following the release.

However, Australian factory price inflation data released overnight gave further impetus to the pair as it showed an increase of 4.3% year-on-year in the first quarter, up from 4.1% in the previous quarter. Producer Price Index (PPI) data added fresh evidence of price pressures in the Australian economy, after first-quarter CPI data beat expectations on Thursday, boosting AUD/USD in the process.

Persistent inflation has the Reserve Bank of Australia (RBA) seen as the last G10 bank likely to cut interest rates, with some analysts now delaying calls for an RBA rate cut until February 2025. The expectation that Australian interest rates will fall more slowly than in other countries is a support for the Australian dollar, as relatively higher interest rates attract greater capital inflows.