In Asian trading on Wednesday, the AUD/USD pair is retreating from a seven-month peak of 0.6813, now trading near the 0.6800 level. The initial spike was driven by the release of Australian Consumer Price Index (CPI) data.
The Australian CPI report indicated a slower-than-expected cooling in consumer prices for July, with a year-over-year increase of 3.5%, slightly above the 3.4% forecast but lower than June’s 3.8% rise. This data reignited speculation about potential further interest rate hikes by the Reserve Bank of Australia (RBA), providing a boost to the Australian Dollar (AUD).
However, the market’s risk aversion has capped the Aussie’s gains, as investors turn to the safe-haven US Dollar (USD). Global stocks have fallen ahead of Nvidia’s earnings report and as traders anticipate speeches from US Federal Reserve officials, which could provide clues about the size of the expected rate cut in September.
Looking ahead, AUD/USD will be influenced by US Federal Reserve commentary and overall market sentiment. Attention will also shift to Thursday’s Australian Private Capital Expenditure data for the second quarter.
From a technical perspective, AUD/USD retains potential for further gains. The 14-day Relative Strength Index (RSI) is positioned above 50 and nearing the overbought zone at around 67. Additionally, recent bullish crossovers on the daily chart support a positive outlook for the Australian Dollar.
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