The AUD/USD exchange rate experienced a pullback as traders positioned themselves ahead of the forthcoming minutes from the Reserve Bank of Australia, set to be released on Tuesday. These minutes will shed light on upcoming meetings, with certain analysts anticipating a rate hike from the bank in the first quarter. The likelihood of an interest rate hike has surged in recent weeks following the release of robust consumer inflation data by the Australian Bureau of Statistics. The report indicated that the headline, trimmed, and weighted consumer inflation figures persisted in their upward trajectory, distancing themselves further from the bank’s target in October. Last week, a new report indicated that inflation expectations in Australia are on the rise, with the average estimate now sitting at 4.7%. Analysts opinion that the bank could increase rates in the first quarter.
The prevailing sentiment suggests that the Federal Reserve is likely to persist with interest rate cuts in the upcoming year, following the latest inflation and employment statistics. The latest data reveals that the headline Consumer Price Index has decreased to 2.6%, whereas the core CPI has risen to 2.7%. Expect these numbers to keep declining in the upcoming months as energy prices decrease. In recent weeks, Brent and WTI prices have experienced a decline, influenced by the current supply and demand dynamics at play. In the meantime, natural gas prices have been on a downward trend, attributed to the milder weather conditions. As we look forward, the next significant catalysts for the pair will be the forthcoming US GDP and consumer confidence report.
The AUD/USD exchange rate has shown a notable rebound recently, climbing from a low of 0.6440 on November 21 to reach a high of 0.6852. The price has retraced a bit to the current level of 0.6617. On the positive side, the pair has surged above all moving averages and the Supertrend indicators, indicating that bulls are firmly in control.
The Relative Strength Index has shifted from the overbought territory at 70 down to the current level of 55. Consequently, the pair is expected to continue its bullish momentum and may potentially revisit the significant resistance level at 0.6700.