Australian Dollar gains ground as Governor Bullock stated that inflation is Is XRP expected to skyrocket?a challenge.
Australia’s central bank is optimistic that the progress in employment can be sustained.
Chinese authorities are expected to provide additional stimulus measures to support the real estate sector.
US Dollar weakens on improved risk appetite and lower US Treasury yields.
The Australian Dollar (AUD) extends its gains for the third successive session on Tuesday. This rally is fueled by the hawkish comments made by the Reserve Bank of Australia (RBA) Governor Michele Bullock. Furthermore, the AUD/USD pair is finding support from the hawkish tone found in the RBA's November meeting minutes, coupled with the rising commodity prices, reflecting investor optimism about potential additional stimulus measures in China.
Australia’s central bank is increasingly optimistic about the labor market as per Governor Bullock. She believes that the progress in employment can be sustained. Moreover, Bullock notes that underlying demand, rather than just supply issues, is contributing to the inflation challenge, making it a significant concern for the next one or two years.
The Reserve Bank of Australia's November meeting minutes reveal that the board acknowledged a "credible case" against an immediate rate hike but considered the case for tightening stronger due to increased inflation risks. The decision on further tightening would hinge on data and risk assessment. The minutes stressed the importance of preventing even a modest rise in inflation expectations. Staff forecasts assumed one or two more rate rises, and rising house prices suggested policy might not be overly restrictive.
According to sources cited by Bloomberg, Chinese authorities are expected to take measures to support the real estate sector by drafting a list of 50 eligible developers, both private and state-owned. This list is expected to guide financial institutions in providing support through various means such as bank loans, debt, and equity financing.
US Dollar Index (DXY) extended its decline, nearing three-month lows due to a combination of improved risk appetite and lower US Treasury yields. Despite the growth in the United States (US) economy, the Greenback finds itself in a vulnerable position in the short term.
Investors will likely focus on Existing Home Sales and the Chicago Fed National Activity Index from the US. Additionally, the Federal Reserve (Fed) is set to release the minutes from its recent meeting.
Australian Dollar continues to gain ground on hawkish RBA tone
Australia’s seasonally adjusted Employment Change reported an increase of 55K in October, compared with the market anticipation of 20K and 6.7K in the previous month.
The Aussie Unemployment Rate came in at 3.7% in October as expected against the previous figure of 3.6%.
Australia’s Wage Price Index grew 1.3% as expected compared to the previous reading of 0.8%. The year-over-year data showed an increase of 4.0% more than the anticipated 3.9%.
The Reserve Bank of Australia (RBA) Assistant Governor Marion Kohler stated that inflation is expected to decrease but won't hit the RBA's 2%-3% target until the end of 2025.
The People’s Bank of China (PBoC) kept its loan prime rate (LPR) unchanged at 3.45% as expected.
Boston Federal Reserve (Fed) President Susan Collins expressed optimism on Friday that the Fed can lower inflation without causing significant damage to the labor market by being "patient" with further interest rate moves.
US Continuing Jobless Claims for the week ending on November 3 reached the highest level since 2022 at 1.865M from the previous reading of 1.833M.
US Initial Jobless Claims for the week ending on November 10 rose to 231K against the 220K as expected, marking the highest level in nearly three months.
The October's US Consumer Price Index (CPI) showed lower readings than expected, with the annual rate slowing from 3.7% to 3.2%, falling below the consensus forecast of 3.3%. The monthly CPI reduced to 0.0% from 0.4%.
The US Core CPI rose by 0.2% below the expectations of 0.3%, and the annual rate decreased to 4.0% from 4.1% prior.
Australian Dollar maintains its position above 0.6550, supported by the 23.6% Fibonacci retracement
The Australian Dollar trades higher around the 0.6560 level on Tuesday. The AUD/USD pair may encounter resistance near the psychological level at 0.6600. On the downside, immediate support is anticipated around the psychological level at 0.6550, followed by the 23.6% Fibonacci retracement at 0.6500. If a break occurs below the level, the nine-day Exponential Moving Average (EMA) at 0.6493 could be the next support.
AUD/USD, Source: FXStreet.