AUD Surges on RBA Hike Odds and Dovish Fed Comments
Australia's economy has shown resilience in the second quarter, leading market participants to believe that the Reserve Bank of Australia (RBA) may raise interest rates again. This speculation has increased the probability of a rate hike this month to 58%, with a rate adjustment to 4.60% now fully priced in for November.
The RBA's decision will be influenced by various factors, including inflation, growth rate, and trade balance. The bank notes that Australia's July trade figures showed a small but expected reduction in the monthly trade surplus, accompanied by an upward revision to June's figure.
Conversely, the US Dollar (USD) is facing pressure after Federal Reserve Governor Christopher Waller indicated a preference for holding interest rates steady at the upcoming September meeting. This dovish comment has led to a sharp drop in market-implied probability of a Fed rate hike in September to 50.2%.
The Australian Dollar (AUD) continues to trade constructively, maintaining a bullish tone above both the nine-period and 50-period Exponential Moving Averages (EMAs). Initial support for AUD/USD is seen at the 9-period EMA around 0.7173, with deeper dynamic floor near 0.7085.