AUD to USD Forecast: Consumer Confidence and Wage Growth Set the Stage for the RBA

Aussie Consumer Confidence

On Tuesday, August 13, Australian consumer confidence data will spotlight the AUD/USD.

Economists forecast the Westpac Consumer Confidence to increase by 0.5% to 83.0 in August.

Upward trends in consumer confidence may indicate higher spending, possibly fueling demand-driven inflation. Significantly, signals of higher consumer spending could raise investor expectations of an RBA rate hike. A more hawkish RBA rate path would raise borrowing costs, which could reduce disposable income and consumer spending.

Aussie Wage Growth and the RBA

Later in the morning session, Aussie wage growth will require consideration.

Economists predict wages will increase by 0.9% in Q2 2024, up from 0.8% in Q1 2024.

Higher wages could boost disposable income and consumer spending, possibly supporting a more hawkish RBA rate path.

Other Economic Indicators

The NAB Business Confidence Index will also be in focus on Tuesday. Economists expect the Index to increase from 4 in June to 5 in July. However, investors should consider the subcomponents, especially the Employment Index. A higher Employment Index could further reinforce investor expectations of an RBA rate hike.

Tighter labor market conditions could support wage growth, increasing disposable income, and consumer spending. The Employment Index fell from 5 in May to 0 in June.

Tuesday’s economic indicators are crucial following the RBA’s recent warning about inflation. Tighter labor market conditions and signals of higher inflation could push the AUD/USD toward $0.68.

RBA Rate Hike Warnings

On Thursday, August 8, RBA Governor Michele Bullock surprised the markets, warning that the RBA will not hesitate to raise interest rates to tame inflation. The AUD/USD ended the Thursday session up 1.15%, closing at $0.65924.

On Monday, August 12, RBA Deputy Governor Andrew Hauser commented on inflation and the labor market, stressing the need for vigilance.

Expert Views on Aussie Inflation, the Labor Market, and the RBA

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero commented on RBA monetary policy, stating,

“The RBA will be watching incoming inflation data like ever before. Major central banks seem to have defeated inflation, but RBA seems stuck. RBA should have done more earlier, as the Fed did, but Australia’s household debt was just too much of a constraint.”

US Economic Calendar

Later in the session on Tuesday, US producer prices will influence the Fed rate path and the AUD/USD pairing.

Economists forecast core producer prices to increase by 0.2% in July, down from 0.4% in June.

Lower-than-expected producer prices increases would signal a weaker inflation environment. Producers may reduce prices in a falling demand environment, lowering consumer prices. A softer inflation outlook would bolster investor bets on multiple 2024 Fed rate cuts. However, an unexpected fall in producer prices could rekindle fears of a hard US landing.

Softer producer price trends could support an AUD/USD move toward $0.67.

Short-Term Forecast: Bullish

Near-term AUD/USD trends will hinge on Tuesday’s Aussie stats and US inflation data. Higher Aussie wages and consumer confidence could raise bets on an RBA rate hike. Conversely, softer US inflation numbers may cement bets on multiple Fed rate cuts. A narrowing interest rate differential between the US and Australia would support an AUD/USD move toward $0.70.

Investors should remain alert, with economic data and central bank commentary influencing AUD/USD price trends. Monitor the real-time data, news updates, and expert commentary to adjust your trading strategies.

Stay updated with our latest views and analysis to manage exposures to the forex markets.

AUD/USD Price Action

Daily Chart

The AUD/USD hovered below the 50-day and the 200-day EMAs, sending bearish price signals.

A breakout from the 200-day EMA would support a move toward the 50-day EMA. Furthermore, a break above the 50-day EMA could give the bulls a run at the top trend line.

Aussie and US stats and central bank commentary require consideration on Tuesday.

Conversely, a drop below the $0.65760 support level may signal a fall toward $0.65000.

With a 14-period Daily RSI reading of 48.59, the Aussie dollar could climb to the top trend line before entering overbought territory.