The Australian Dollar (AUD) advanced by over 0.20% on Tuesday, with the AUD/USD pair trading at 0.7163 after rebounding from daily lows of 0.7137, following the release of hawkish minutes from the Reserve Bank of Australia's (RBA) latest meeting [1]. The minutes indicated that the RBA board was close to raising interest rates, emphasizing concerns about upside inflation risks [1]. According to ANZ analysts, if the upcoming trimmed mean Consumer Price Index (CPI) prints in line with expectations, the November RBA meeting could be 'live' for a potential rate move [1].
Market participants are closely watching Australia's July CPI data, expected to decline from 3.8% to 3.2% year-over-year, with the trimmed mean CPI projected to ease from 3.6% to 3.5% year-over-year [1]. Despite the hawkish tone in the RBA minutes, money markets are currently pricing in 14 basis points of tightening for the December meeting, implying a 50% chance of a rate hike by year-end [1].
In the broader context, US economic data was mixed, with the Conference Board's Consumer Confidence index falling to 89.4 in August, the lowest in seven months, while July Building Permits improved but missed forecasts [1]. Meanwhile, global risk sentiment was influenced by reports of a possible US-Iran ceasefire, which led to a more than 5% drop in oil prices, though this news was not widely confirmed [1].
Technical analysis shows AUD/USD maintaining a bullish bias, trading above clustered simple moving averages around 0.7003 and supported by rising trend lines, with the Relative Strength Index at approximately 66, indicating firm but not extreme positive momentum [1].
CONCLUSION
The Australian Dollar's recent gains are attributed to hawkish signals from the RBA minutes and anticipation of key inflation data. While markets see a moderate chance of a rate hike by year-end, the upcoming CPI release will be pivotal for future RBA policy decisions. Technical indicators suggest continued bullish momentum for AUD/USD in the near term.