- AUD/USD gains traction and reclaims the 0.6800 mark on Thursday.
- Federal Reserve (Fed) hiked the interest rate by 25 basis points (bps) to a target range of 5.25%–5.5%.
- Market participants will focus on the US Q2 GDP, Australian Retail Sales MoM.
The AUD/USD pair attracts some buyers and surges above the 0.6800 area during the Asian session on Thursday. The prevalent US Dollar selling bias supports the uptick in AUD/USD. The major pair currently trades around 0.6807, gaining 0.75% for the day.
On Thursday, the Australian Bureau of Statistics showed that the Import Price Index QoQ in the second quarter dropped 0.8%, against the market consensus of a 7.3% decline and a 4.2% drop in the previous reading. Meanwhile, the Export Price Index fell 8.5%, worse than expected, with a 7.8% rise and a 1.6% increase in the first quarter.
The softer Australian data on Wednesday suggests reasons for the Reserve Bank of Australia (RBA) to pause the additional rate hikes. Earlier this week, the Australian Bureau of Statistics (ABS) reported that the country's Consumer Price Index (CPI) rose 0.8% in the second quarter of 2023, compared to a 1.4% increase in the first quarter and the market consensus of 1.0% growth.
In the meantime, the fear of the economic slowdown in China might be a headwind for the China-proxy Aussie. On Tuesday, Chinese news agency Xinhua reported that Chinese policymakers would take up economic policy adjustments, strengthening confidence and mitigating risks. However, concern is high over whether China will deliver on its policy pledges.
Across the pond, the Federal Open Market Committee (FOMC) hiked its interest rate by 25 basis points (bps) to a target range of 5.25%–5.5%. Fed Chairman Jerome Powell stated following the rate decision that the FOMC will assess the totality of incoming data, along with its implications for economic activity and inflation. He added that it's possible to raise the Fed funds rate again at the September meeting if the data warrants it.
Market participants will digest the FOMC statement and shift their attention to the economic data. Later in the day, the US Initial Jobless Claims, Durable Good Orders for June, Advanced Gross Domestic Product (GDP) QoQ, and Core Personal Consumption Expenditure (PCE) Price Index MoM will be due. The Retail Sales MoM and the Producer Price Index (PPI) will be released on the Australian docket on Friday.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD climbs to fresh monthly high above 1.0800
EUR/USD gathered bullish momentum and advanced to its highest level in a month above 1.0800 in the American session on Tuesday. The renewed selling pressure surrounding the US Dollar ahead of Wednesday's key inflation data provides a boost to the pair.
GBP/USD rises above 1.2550 on renewed USD weakness
After falling toward 1.2500 in the early American session, GBP/USD regained its traction and turned positive on the day above 1.2550. The US Dollar struggles to find demand following the producer inflation data and allows the pair to stretch higher.
Gold extends daily recovery toward $2,350
Following Monday's decline, Gold stages a rebound toward $2,350 on Tuesday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% after April producer inflation data, allowing XAU/USD to hold its ground.
Ethereum knocking at support’s door
Crypto market capitalisation rose 0.8% over the past 24 hours to 2.2 trillion, but growth exceeded 2% for most of the period. However, it dipped at the start of active European trading, temporarily returning to levels of a day ago.
Entering a crucial run of data for financial markets
We are entering a crucial period for financial markets and forecasters as Americans' near-term inflation expectations rise again. Upcoming reports on the CPI and PPI for April, along with new data on retail sales and industrial production, will provide valuable insights.