The U.S. dollar remained firm on Wednesday ahead of the highly anticipated Consumer Price Index (CPI) report, while the Australian dollar languished at a four-month low due to domestic economic pressures.
The US Dollar (USD) remained steady ahead of the highly-anticipated Consumer Price Index (CPI) report, whilst the Australian Dollar hung at a 4-month low – a result of domestic economic pressures. Investors are now keeping an eye on the CPI data release to gauge what steps the Federal Reserve will take next. Market analysts expect the report to show a 0.3% increase in core inflation for November 2024, following a 0.2% rise in October 2024. CPI data could also affect the Federal Reserve’s decision to continue to pause interest rate hikes.
In parallel, the Australian Dollar (AUD) slipped as weak Gross Domestic Product (GDP) figures added to concerns over Australia’s lagging economy, which had grown by just 0.2% during the third quarter of 2024. due to subdued household spending and a cooling labour market.
Despite inflation falling to 2.8% in October, the central bank has now adopted a cautious stance. It has maintained its cash rate at 4.35% and hinted that it is unlikely there will be rate cuts before mid 2025, unless inflation moderates significantly.
In forex currency markets, the AUD traded below critical support levels, whilst other currencies like the EUR and JPY fluctuated amid broader market volatility.
