Audusd Drops Before Us Inflation

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Audusd Drops Before Us Inflation

Aud/Usd Drops Near 0.6550, Focus On Us Inflation

AUD/USD has dropped to around 0.6550 on Tuesday. It seems that the AUD has turned weak as investors are choosing assets that will perform better in the era of Donald Trump's administration.

One of the assets that has been benefiting from the recent sentiment is the US dollar. The general perception is that the policies of the new US government will boost the US GDP.

Trump Policies To Boost Us Gdp

Trump has already announced a 10% universal tariff on imports. Furthermore, he will also lower the corporate tax which will boost the US stock markets.

In general, we can expect an increased demand for US-produced services/goods. On top of that, the business investment and the labor demand will also go up.

That's why if we look at the DXY, it has gone up to 105.90 which is a 4-month high. This means that the US Dollar is now sitting at its highest level in 4-months aginst the 6 currencies.

Now, the focus is on the US CPI for the month of October. The data release is due on Wednesday and will show us the inflation situation in the USA.

According to economists, the headline inflation (October) will move from 2.4% to around 2.6%. Similarly, the core CPI is expected to touch 3.3%. Over all, both the inflation figures are expected to go up in October 2024.

The bottom line is that the AUD is underperforming against the US Dollar. All of this is happening even though the RBA is highly likely to maintain the current OCR in the short-term.

The RBA seems to be focused on making sure that there are no upside risks for the inflation. The RBA is also very confident about the labor market's stability.

higher-than-expected US inflation report will be beneficial for the US Dollar. In other words, we can expect more downside in the AUD/USD after the release of US CPI.

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