Aud Stays Strong On Rba Meeting

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Aud Stays Strong On Rba Meeting

Australian Dollar (Aud) Stays Strong On Rba Meeting Minutes

The Australian Dollar (AUD) showed a bullish momentum on Monday despite the improvement in risk aversion. The strength in the Australian Dollar (AUD) comes from strong retail sales, PMI for services, and high inflation.

All of these factors have pushed the RBA to start thinking about delaying the rate cuts as inflation has started to resurface once again. However, the one thing that is still capping the upside in the AUD/USD is the renewed demand for USD.

Rba Warns On Inflation Risks

According to the June meeting minutes of RBA, they highlighted how inflation poses upside risks, which warrants the need to stay cautious. The RBA members also talked about how higher interest rates are needed amid an increase in prices.

The Australian CPI for May showed an increase from 3.6% to 4.0%, a difference of +0.4%. However, the bigger picture is that the change in CPI also highlights how inflation is slowly moving away from the RBA's target.

In the USA, employment growth stalled in May, while the NFP report exceeded the forecasts. At the same time, the unemployment rate has gone higher, which is a sign that the higher rates are finally showing their effects in the labor market. But, this has also led to speculations on how the Fed will have to cut rates sooner than later.

After June's NFP report, the chances of a rate cut in September have increased from 64.1% to around 70.7%, a change of more than +6%.

For now, the AUD/USD pair trades near 0.6740 with a bullish bias, but technical readings show that a bearish reversal might be just around the corner.

According to experts, the AUD/USD will likely move towards 0.6755 and then hit the next target at 0.6800. However, a break of the 0.6639 will signal a trend change in the AUD/USD pair.

Over all, as long as the broader USD weakness remains in effect, the AUD/USD will stay positive for now.

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