The AUD/USD pair is seeing its recent strong gains consolidated to the highest level since September 18, which it touched the day before, and oscillates between tepid gains/minor losses during the Asian session on Wednesday. Spot prices are currently trading around the 0.6640 area, virtually unchanged on the day, as traders eagerly await the outcome of the two-day FOMC meeting.
The US Federal Reserve is scheduled to announce its policy decision later during the US session, and is widely expected to cut borrowing costs by 25 basis points. This has been a major factor behind the recent decline of the US Dollar (USD) to its lowest level since late October and the strong upward movement the AUD/USD pair has seen over the past two weeks or so. However, traders seem reluctant to place aggressive bets and are choosing to wait for further signals on the path of future interest rate cuts by the Fed.
Hence, the focus will remain on the updated economic forecasts and Fed Chairman Jerome Powell’s comments during the post-meeting press conference. The forecasts, in turn, will play a major role in influencing the near-term dynamics of USD prices and determining the next phase of the directional movement of the AUD/USD pair. Meanwhile, the Reserve Bank of Australia (RBA)’s hawkish stance may continue to support the Australian Dollar (AUD) and act as a tailwind for the currency pair.
As expected, the Reserve Bank of Australia left its policy rate unchanged at 3.6% on Tuesday. Furthermore, Reserve Bank of Australia Governor Michelle Bullock said the board has discussed what they might need to do if there is a need to raise interest rates, and it appears there is no need for further rate cuts. This in turn supports the argument for further appreciation for the Australian dollar, which appears somewhat unaffected by mixed Chinese inflation figures, suggesting that consumer prices accelerated in November while output continued to contract.
The National Bureau of Statistics reported earlier today that the headline Consumer Price Index (CPI) accelerated to a 0.7% year-on-year rate last month, compared to the 0.2% rise recorded in October. In contrast, the producer price index fell by 2.2% year-on-year in November, compared to a decline of 2.1% in the previous month. However, the fundamental backdrop appears to be tilting in favor of the AUD bulls and suggests that the path of least resistance for AUD/USD remains to the upside.
The price of the Australian dollar this month
The table below shows the percentage change in the Australian Dollar (AUD) against the major currencies listed this month. The Australian dollar was the strongest against the Swiss franc.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.27% | -0.52% | 0.30% | -0.88% | -1.35% | -0.73% | 0.32% | |
| euro | 0.27% | -0.25% | 0.56% | -0.61% | -1.08% | -0.44% | 0.60% | |
| GBP | 0.52% | 0.25% | 1.06% | -0.36% | -0.84% | -0.19% | 0.85% | |
| JPY | -0.30% | -0.56% | -1.06% | -1.17% | -1.65% | -1.01% | 0.02% | |
| Canadian | 0.88% | 0.61% | 0.36% | 1.17% | -0.53% | 0.17% | 1.21% | |
| Australian dollar | 1.35% | 1.08% | 0.84% | 1.65% | 0.53% | 0.65% | 1.70% | |
| New Zealand dollar | 0.73% | 0.44% | 0.19% | 1.01% | -0.17% | -0.65% | 1.04% | |
| Swiss franc | -0.32% | -0.60% | -0.85% | -0.02% | -1.21% | -1.70% | -1.04% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the Australian dollar from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
