AUD Edges Higher as Household Spending Rises Amid High Borrowing Costs

The Australian dollar edged higher on Tuesday as economic news provided a boost to investor sentiment. Household spending rose by 0.8% in June, despite high borrowing costs and declining consumer sentiment.

This increase in spending comes as drivers responded to high petrol prices by buying new electric vehicles, according to the Australian Bureau of Statistics data. Spending growth for the whole June quarter slowed slightly to 0.7% in real terms.

The Reserve Bank of Australia may take this data into consideration when deciding on future interest rate hikes. Markets have priced out almost any chance of a rate rise from the RBA at its policy meeting next week, but analysts suspect that rates might still need to increase if inflation proves stubborn over the third quarter.