The Australian Dollar (AUD) gained ground against the US Dollar (USD) on Wednesday, recovering from earlier losses as traders reacted to key comments from both the Reserve Bank of Australia (RBA) and the US Federal Reserve (Fed).
The Aussie drew support after RBA Assistant Governor Sarah Hunter noted that recent data has been stronger than expected and that inflation is likely to come in higher than earlier forecasts for the third quarter. She also pointed out that the labor market and economic conditions may be tighter than assumed, though she expects consumer momentum to soften slightly in the coming months.
Meanwhile, China’s Consumer Price Index (CPI) fell 0.3% year-over-year in September, deeper than expected, while producer prices also declined. As Australia’s largest trading partner, any weakness in China’s economy can influence the AUD — a key focus for foreign exchange trading participants.
On the global front, the US Dollar weakened as Fed Chair Jerome Powell signaled another quarter-point rate cut could be coming in October. Markets are pricing in a 94% chance of a cut this month and another in December, as economic uncertainty and a slowdown in job growth keep investors cautious.
Technically, the AUD/USD pair trades near 0.6500, supported by improved risk sentiment. A move above 0.6553 could signal more upside, while a drop below 0.6450 might renew selling pressure.
For forex traders, the AUD/USD forecast remains cautiously bullish in the short term as RBA optimism contrasts with the Fed’s dovish tone, keeping the Australian Dollar supported despite global volatility.
