Australian Dollar holds firm as markets eye RBA Minutes and inflation data

The Australian Dollar (AUD) is holding firm against the US Dollar (USD) on Monday, with AUD/USD hovering close to the 0.6500 mark. The pair remains resilient despite a modest rebound in the Greenback, which is stabilizing after a sharp drop on Friday. At the time of writing, the pair is trading around 0.6486.

Last week, the Aussie gained ground following Federal Reserve (Fed) Chair Jerome Powell’s dovish tone at the Jackson Hole Symposium, which triggered a broad US Dollar selloff and restored expectations for a possible September rate cut.

Focus turns to RBA Minutes and inflation data

The Reserve Bank of Australia (RBA) cut the cash rate by 25 basis points to 3.60% in its August 12 meeting, citing a softer economic outlook and easing price pressures. On Tuesday, markets will closely analyze the RBA Meeting Minutes to assess how united the board was on the decision and whether further cuts are likely in the near term.

Traders will watch for the RBA’s assessment of services inflation, household consumption trends, and external risks. Any dovish tone in the minutes could reinforce market bets for another cut as soon as October.

On Wednesday, attention shifts to the Monthly Consumer Price Index (CPI) report for July, which will offer a timely gauge of inflation momentum in Australia. While the quarterly CPI remains the RBA’s preferred measure, the monthly data is increasingly important in shaping near-term policy expectations. The inflation is projected at 2.3% on an annual basis, up from 1.9% in June, potentially signaling renewed price pressures. A stronger-than-expected print could reduce the urgency for further rate cuts and lend support to the Australian Dollar, while a softer reading would likely reinforce market expectations for additional RBA easing later this year.

While the Australian Dollar remains stable for now, broader sentiment stays cautious amid persistent concerns over China’s economic slowdown and global growth headwinds. The US Dollar, meanwhile, is showing signs of recovery as traders await key US data releases later in the week, including Consumer Confidence and Core Personal Consumption Expenditure (PCE) inflation and Weekly Initial Jobless Claims. Both softer inflation readings and signs of cooling in the labor market could reinforce expectations for a September Fed rate cut.