AUD Trades Flat Ahead of RBA Rate Decision as US CPI Looms

The Australian Dollar (AUD) has been trading steadily near the 0.7060 level against the US Dollar (USD), after six consecutive weeks of gains. The Reserve Bank of Australia (RBA) is expected to keep the cash rate at 4.35%, following a series of hikes earlier in the year that lifted the rate from 3.60%. Governor Michelle Bullock will speak after the release of the Statement on Monetary Policy, which includes fresh forecasts.

The recent run-up in the AUD was helped by the weak US July Nonfarm Payrolls, which surprised with a fall of 23,000 jobs against forecasts for an 80,000 gain. This has reduced the likelihood of a September Federal Reserve hike and pressured the Dollar, allowing the Aussie to hold its ground.

However, the upcoming US Consumer Price Index (CPI) reading on Wednesday could change this picture. A hot July reading would put a September Fed hike back on the table and give the USD a reason to strengthen, potentially squeezing the AUD/USD pair. On the other hand, a soft CPI reading would keep the Fed on hold and leave room for the Aussie to maintain its recent range.