The Australian Dollar (AUD) traded in a tight range around 0.7215 against the US Dollar (USD) during the European session on Thursday, as investors awaited the release of the United States Producer Price Index (PPI) data for August, scheduled for 12:30 GMT [1]. Market participants are closely monitoring the US producer inflation figures, with estimates suggesting that the headline PPI grew at a faster pace of 5.3% year-on-year, up from 4.7% in July, while the core PPI rose by 4.6% year-on-year compared to the previous 4.2% reading [1].
The outcome of the PPI, along with the upcoming US Consumer Price Index (CPI) data for August due on Friday, is expected to influence expectations regarding the Federal Reserve’s monetary policy. Signs of accelerating price pressures at both the consumer and wholesale levels could prompt speculation about further Fed interest rate hikes in the near term. However, a recent Reuters poll indicated that the majority of economists surveyed anticipate the Federal Funds Rate will remain at its current level by year-end [1].
On the domestic front, the Reserve Bank of Australia (RBA) has maintained a hawkish tone. Deputy Governor Andrew Hauser, in an interview with ABC on Tuesday, warned of persistent upside inflation risks, reinforcing the central bank’s readiness to raise rates again if necessary [1]. Hauser stated, "The question now, frankly, for us is have we done enough or is more needed," highlighting the ongoing policy dilemma and the possibility of further tightening if inflation does not moderate as expected [1].
From a technical perspective, AUD/USD is holding above the 20-day exponential moving average (EMA) at 0.7163, with the Relative Strength Index (RSI) around 67, indicating a bullish near-term bias but not yet overbought. Immediate support is seen at the 20-day EMA, and a daily close below this level could signal a deeper correction, while holding above it keeps the focus on further gains [1].
CONCLUSION
The Australian Dollar remains range-bound as markets await key US inflation data, with both the Federal Reserve and the RBA signaling cautious but potentially hawkish stances. Technical indicators suggest a bullish bias for AUD/USD, though upcoming US PPI and CPI releases could shift market sentiment. Investors are watching closely for any signals that could alter the current monetary policy outlook.