AUSTRALIAN DOLLAR STRENGTHENS FURTHER FOLLOWING US PCE FIGURES

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  • AUD rose against USD due to US inflation reduction and a potential dovish stance from the Fed.
  • Soft PCE data from the US may benefit the Aussie policy divergence between the RBA and Fed.
  • RBA's delayed rate cuts could bolster the Aussie, contrasting with other G10 central banks' reduction strategies.

Friday's session recorded a significant uplift in the Australian Dollar (AUD) against the US Dollar following an unexpected inflation reduction in the US in May. As a result, expectations of a possibly dovish stance from the Federal Reserve (Fed) grew, leading to a likely divergence in policy with the Reserve Bank of Australia (RBA).

The Australian economy demonstrates minor signs of weakness. However, the heightened inflation rates maintain a stubborn resilience, preventing the RBA from implementing potential rate cuts. The RBA is foreseen delaying rate cuts, making it one of the last G10 country central banks to adopt a reduction policy. These delayed cuts might enhance the further strengthening of the Aussie


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