The Australian dollar has continued to grapple against the power of the mighty US dollar. But today, AUD/USD attempted to fight its way back, setting a high at 0.7640 when just on Friday, it traded as low as 0.7587.
This, however, does not signal a green light just yet as the report on the Consumer Price Index for the third quarter of 2016 this week could have a major effect on the Reserve Bank of Australia‘s (RBA) interest rate.
RBA Governor Philip Lowe said that recent data suggests that the economy is adjusting reasonably well and he is watching employment and stability of financial system when setting rates.
He further went on to say that inflation expectations have declined, but not at unprecedented lows, suggesting that there should be measures taken to safeguarding against inflation expectations failing.
The Q3 CPI will be an essential update as figures on the labor market prove to be rather mixed. Yet, there could be little benefit if the rates are lowered as it could lead to greater financial risks.
In the meantime, the Aussie dollar may struggle against the US dollar considering the US interest rate curve. The upcoming American elections shall no doubt add to the equation. This will continue to drive investors on the chance that the Federal Reserve Board may potentially increase rates in December.
As of 17:42 GMT, AUD/USD is trading at 0.7597 after opening at 0.7605 today. EUR/AUD rose from 1.4294 to 1.4314, and AUD/JPY advanced from 78.98 to 79.19.
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