Australian Shares Poised to Rise as Weaker US Dollar Boosts Gold

Australian shares are expected to open higher today after overnight US inflation data revealed a weaker US dollar and lifted gold prices. The softer inflation data led to a rally in US stocks, as investors scaled back expectations for further Federal Reserve rate hikes.

The weaker US dollar often supports dollar-priced commodities like gold, which can have a positive impact on Australia's materials-heavy market. However, the next key local cue is the release of Australia's producer price indexes (PPI) at 11:30 am Sydney time. The PPI print tracks price pressures facing businesses before they reach consumers.

A hotter-than-expected reading in the PPI could lead to higher Australian interest rates, which would typically push government bond yields up and make shares look less attractive. On the other hand, a cooler reading can do the opposite, pulling yields down and giving valuations some breathing room.