GBP/USD: Will US Consumer Inflation Hit The Fed's 2% Target?

The Australian dollar is extending gains versus the US dollar for a third straight session. The pair closed on Monday 0.2% higher at US$0.6839. The Aussie dollar US dollar is up an additional 0.2% today, hitting a 4-day high of US$0.6861.

A slightly more dovish sounding Reserve Bank of Australia didn’t prevent the Australian dollar advancing on Tuesday. Dr Philip Lowe, the Governor of the RBA, reiterated during a scheduled speech, that the central bank was prepared to cut interest rates further if needed. However, he once gain pushed back on the idea of turning interest rates negative.

The RBA has cut interest rates three times over the past five months, in order to support the slowing economy and boost hiring. Dr Lowe said that he was confident that the cuts were helping the Australian economy turn a gentle corner. Dr Lowe also reiterated themes of recent speeches, once again confirming that it is unlikely that Australia will experience negative interest rates.

Aussie dollar investors will look ahead to inflation figures tomorrow. Inflation is expected to have increased to 1.7%, up from 1.6%. Stronger inflation could help the Australian dollar extend gains into a fourth straight session.

Consumer Confidence Disappoints

The dollar remains under pressure on Tuesday, after weaker than forecast US consumer confidence figures. Household sentiment increased to 125.9 in October, up from 125.1. However, this was we short of the 128 figure that analysts had forecast.

The survey showed that whilst consumers felt good about current conditions, future expectations had lowered slightly. Some consumers expressed concerns about business conditions and job prospects.

Retail sales last month were particularly weak. Data showing that consumer confidence is falling just ahead of the holiday season is also a little worrying. As a result, the dollar slipped.

Investors will now look ahead to tomorrows US GDP data followed by the Federal Reserve monetary policy announcement. Market participants widely expect the Fed to cut rates. Investors will be watching closely to see whether this will be the end of the cycle for the Fed or whether there will be more cuts to come.


What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 USD = 0.6784 AUD

Here, $1 is equivalent to approximately A$0.67. This specifically measures the US dollar’s worth against the Australian dollar. If the Aussie dollar amount increases in this pairing, it’s positive for the US dollar.

Or, if you were looking at it the other way around:

1 AUD = 1.4739 USD

In this example, A$1 is equivalent to approximately $1.47. This measures the Australian dollar’s worth versus the US Dollar. If the US dollar number gets larger, it’s good news for the Aussie dollar. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views