- AUD/USD retreats as US CPI report indicates core inflation remains at 3.2% YoY, dampening prospects for a 50bp Fed rate cut.
- Money market futures now forecast an 85% chance of a 25 basis point rate cut at the next Fed meeting.
- The RBA Deputy Governor notes that the Australian labour market is tight but balanced, with the AUD awaiting more US data this week.
The Australian Dollar fell during the North American session after the latest US Consumer Price Index (CPI) report showed rising prices. Market participants who had priced in a larger rate cut from the Federal Reserve reduced their bets, sponsoring a rally in the US Dollar. AUD/USD is trading at 0.6627 after hitting a daily high of 0.6673.
AUD/USD drops to 0.6627 as rising US core inflation dampens hopes for a bigger Fed rate cut
Data from the US Bureau of Labor Statistics (BLS) revealed that headline inflation in August fell from 2.9% to 2.6% year-on-year as expected. Still, core inflation, which excludes volatile elements and is considered a realistic gauge of inflation, remained at 3.2% year-on-year. On a monthly basis, core CPI rose from 0.2% to 0.3% while CPI stood at 0.2% month-on-month.
Following the report, money market futures traders cut the odds of a 50 basis point (bp) cut to 15%, while the odds of a 25 bp cut rose to 85%, according to data from the CME FedWatch tool.
This supported the Dollar and weighed on AUD/USD, which extended its losses to a daily low of 0.6622 before recovering some ground.
Meanwhile, the US Dollar Index (DXY), which measures the performance of the greenback against six currencies, held with small gains of 0.02% at 10168.
Earlier in the Asian session, Reserve Bank of Australia (RBA) Deputy Governor Sarah Hunter made comments leaning towards a hawkish stance, saying the labour market remains tight relative to full employment but has become better balanced since late 2022. Hunter said the economy is passing through an inflection point.
What to observe?
The Australian economic calendar will be empty for the rest of the week. On Thursday, the US calendar will include the Producer Price Index (PPI) and Initial Claims for Unemployment Benefit for the week ending September 7. On Friday, the University of Michigan Consumer Sentiment Index is expected.
AUD/USD Price Forecast: Technical Outlook
The AUD/USD pair has fallen below the 50-day and 100-day moving averages (DMA) at 0.6667 and 0.6647, opening the door for a challenge to the 200-day moving average at 0.6616. If sellers push prices below the latter, look for more losses. They need to break 0.6600 first, and the next stop would be the August 15 low of 0.6560.
Conversely, if buyers step in and push prices above the current week’s high of 0.6689, look for a test of 0.6700.
Australian Dollar PRICE Today
The table below shows the Australian Dollar (AUD) exchange rate against major currencies today. The Australian Dollar was the strongest currency against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.42% | -0.65% | -0.11% | 0.06% | 0.43% | 0.28% | |
| EUR | -0.05% | 0.37% | -0.73% | -0.15% | 0.06% | 0.37% | 0.23% | |
| GBP | -0.42% | -0.37% | -1.14% | -0.53% | -0.37% | 0.00% | -0.14% | |
| JPY | 0.65% | 0.73% | 1.14% | 0.57% | 0.71% | 1.08% | 0.94% | |
| CAD | 0.11% | 0.15% | 0.53% | -0.57% | 0.16% | 0.53% | 0.38% | |
| AUD | -0.06% | -0.06% | 0.37% | -0.71% | -0.16% | 0.30% | 0.23% | |
| NZD | -0.43% | -0.37% | -0.00% | -1.08% | -0.53% | -0.30% | -0.14% | |
| CHF | -0.28% | -0.23% | 0.14% | -0.94% | -0.38% | -0.23% | 0.14% |
The heatmap shows percentage changes of major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the chart will represent the AUD (base)/USD (quote).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
