The Australian dollar jumped in the Asian market on Wednesday to a seven-month high against its U.S. counterpart, extending gains for the second consecutive day, after inflation data released a short while ago in Sydney, which shows that the Reserve Bank of Australia is still facing entrenched inflationary pressures.
The data has reduced the likelihood that the Fed will ease monetary policy and cut Australian interest rates this year, supporting purchases of the Australian dollar as one of the best investment opportunities available in the foreign exchange market.
Price outlook • Australian dollar exchange rate today: The Australian dollar rose against its US counterpart by 0.3% to (0.6813), the highest since last January, from the opening price of today’s trading at (0.6792), and recorded a low at (0.6784).
The Australian dollar rose about 0.3% against the US dollar on Tuesday, the second gain in the last three days, as the sell-off in the greenback continued after more pessimistic comments from Federal Reserve Chairman Jerome Powell at the Jackson Hole forum.
Data from Australia’s Office for National Statistics showed on Wednesday morning that the annual consumer price index recorded a rise of 3.5% in July, above market expectations of a rise of 3.4%, and the index recorded a rise of 3.8% in June.
Inflation in Australia is higher than expectations in July
Services cost pressures remained stubbornly high in Australia, a disappointing outcome for RBA’s monetary policymakers, and prompted markets to completely abandon hopes of any Australian interest rate cuts this year.
The minutes of the last meeting of the Reserve Bank of Australia, held on August 6, which resulted in keeping interest rates little changed at the 4.35% range, the highest range in 13 years, for the sixth consecutive meeting, were revealed. “Australian monetary policymakers have considered raising interest rates in their attempt to tame inflation.”
Financial markets and economists believe that the RBA’s next move will be to ease monetary policy and cut interest rates, although they are divided on timing, and the consensus currently suggests that the move will not begin until 2025.
Read also:GBP gives up 29-month peak due to profit-taking
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