AUD to USD Forecast: RBA Talk and US Inflation Data to Guide the Aussie

RBA Deputy Governor Andrew Hauser

On Monday, August 12, RBA Deputy Governor Andrew Hauser could influence buyer appetite for the AUD/USD.

Investors should consider comments regarding inflation, wage growth, and the RBA’s interest rate trajectory. Warnings of an interest rate hike to tackle inflation could boost Aussie dollar demand and support an AUD/USD return to $0.66.

Recent Developments

On Thursday, August 8, RBA Governor Michele Bullock warned that the RBA will not hesitate to raise interest rates to tackle high inflation. The AUD/USD reacted to the warning, surging by 1.15% to close the session at $0.65924.

A Pivotal Week for the Aussie

While the RBA’s views on inflation will influence the AUD/USD pairing, crucial economic data releases will also move the dial.

On Tuesday, August 13, Aussie business and consumer confidence and wage growth figures may influence the RBA rate path.

Higher wages could increase disposable income, fueling consumer spending and demand-driven inflation. Additionally, a rise in consumer confidence may also boost spending. An RBA interest rate hike could increase borrowing costs, reducing disposable income and consumer spending.

Furthermore, the NAB Business Confidence survey and subcomponents, including the Employment Index, could reflect labor market and consumer spending trends.

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

NAB Head of Australian Economics Gareth Spence remarked on the June Business Confidence survey, stating,

“Business conditions continued their now long-running easing trend in June. […]. Of note is the sharp decline in the employment index in the month.”

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 Monday, US consumer inflation expectations could influence sentiment toward the Fed rate path.

Economists predict consumer inflation expectations of 3.0% in July, unchanged from June. An unexpected fall could affect buyer appetite for the US dollar, supporting an AUD/USD move toward $0.66.

Consumer inflation expectations can influence spending and price trends. Consumers could delay spending if they expect prices to fall, dampening demand-driven inflation. The Fed could cut rates to boost disposable income and spending, to deliver price stability.

Expert Views on US Inflation

FOMC Member Michelle Bowman commented on inflation and the Fed rate path on Saturday, August 10, stating,

“Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate. But we need to be patient and avoid undermining continued progress on lowering inflation by overreacting to any single data point.”

Short-Term Forecast: Bullish

Near-term AUD/USD trends will hinge on US inflation numbers and Aussie labor market data. Softer US inflation could weaken US dollar demand. Moreover, higher Aussie wages and employment figures (Thurs) could support an RBA rate hike. A narrowing interest rate differential between the US and Australia could support an AUD/USD return to $0.67.

Investors should remain alert, with RBA chatter and US economic data 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 remained below the 50-day and the 200-day EMAs, affirming bearish price signals.

A break above the $0.65760 resistance level would support a move toward the 200-day and 50-day EMAs. A breakout from the EMAs could give the bulls a run at the top trend line.

Central bank commentary and US consumer inflation expectations require consideration on Monday.

Conversely, a fall through $0.65500 could bring sub-$0.65 and the $0.64582 support level into play.

With a 14-period Daily RSI reading of 45.24, the Aussie dollar could fall to the $0.64582 support level before entering oversold territory.