- US Dollar (USD) declines even as CPI +0.4% vs +0.3% exp.
- US Federal Reserve Rate Decision Next week
- Australian Dollar (AUD) rises despite rising US – China tensions
- RBA minutes next week
The Australian Dollar US Dollar (AUD/USD) exchange rate is heading higher, paring losses from the previous session. The pair settled -0.36% lower on Thursday at US$0.7256. At 15:30 UTC, AUD/USD trades +0.2% at US$0.7276. The pair is set to end the week at the same level that it started the week.
The US is trading lower despite encouraging US inflation figures. Inflation as measured by consumer prices rose +0.4% in August compared to the previous month, better than the 0.3% increase market participants had been expecting. On an annual basis consumer prices rose 1.3%, against 1.2% forecast. Meanwhile core inflation, which excludes more volatile items such as food and fuel increased an impressive 1.7% in August compared to last year. This is still below the US Federal Reserve’s 2% average target; however it is a step in the right direction.
The US Senate failed again this week to agree to additional stimulus. The Democrat lead $300 billion rescue package wasn’t agreed to, which hs added pressure to the greenback.
Looking ahead, next week sees the release of the US Federal Reserve monetary policy announcement on Wednesday, as well as consumer confidence on Friday and the weekly jobless claims on Thursday.
The Australian Dollar was among the top weekly performers, trading higher versus its major peers. The risk sensitive Australian Dollar managed to push higher even as tensions between the US and China escalate.
President Trump has said that the deadline for the sale of Chinese owned TikTok won’t be extended beyond the 20th September. If Beijing based ByteDance can’t find a buyer before then, TikTok will be banned in the US. This adds a real sense of urgency. Analysts had expected the deadline to be extended given the complexity of the sale. Trump’s comments will aggravate already tense relations with China.
Looking ahead the minutes to the Reserve Bank of Australia’s latest monetary policy will be released next week.