AUD/USD Sees Continued Gains
The AUD/USD pair has managed to extend its winning streak to 12 days as of Monday. It’s been trading confidently close to the 0.6650 mark, which is a high not seen in the last two months, particularly noted during late Asian trading on Friday.
Recently, the Australian dollar has demonstrated considerable strength, largely because investors are anticipating that the Reserve Bank of Australia (RBA) will confirm that the era of interest rate cuts is over in the upcoming monetary policy announcement scheduled for Tuesday.
Despite the RBA’s generally dovish outlook, traders seem to believe that the central bank will soon tighten policy as inflation remains persistent. Australia’s inflation rate for the third quarter jumped to a quicker annualized pace of 3.2%, showing a notable increase from the 2.1% rise recorded in the second quarter.
In another corner of the globe, China’s trade balance figures for November pleasantly surprised analysts, with strong export performance. The National Bureau of Statistics reported a trade surplus that expanded from $90.07 billion in October to $111.68 billion in November, though projections suggest that this growth may slow to around $100.2 billion. Exports rose significantly by 5.7% in Chinese yuan terms, rebounding after a slight dip of 0.8% in October.
This solid trade balance data is a positive signal for the Australian dollar, particularly since Australia’s economy relies heavily on exports to China.
Meanwhile, in the U.S., all eyes are on the Federal Reserve as it prepares for its monetary policy announcement on Wednesday. There’s a strong expectation that the Fed will implement a 25 basis points cut to bring the rate to between 3.50% and 3.75%, as job market conditions are showing signs of strain. As of now, the U.S. Dollar Index, which tracks the performance of the dollar against six major currencies, is drifting cautiously near a five-week low of 98.75 seen last Thursday.
Upcoming Economic Indicators
The RBA is set to announce its interest rate decisions during its scheduled meetings throughout the year. Generally, a hawkish stance regarding inflation tends to be good news for the Australian dollar, while a dovish outlook, whether through keeping rates steady or cutting them, could signal trouble for the currency.
