AUD to USD Forecast: Aussie Inflation Data May Fuel RBA Rate Hike Bets

Bob Mason
Updated: Jun 13, 2024, 22:32 GMT+00:00

Key Points:

  • On Friday (June 14), consumer inflation expectation numbers from Australia warrant investor attention.
  • After Australian unemployment numbers on Thursday, higher inflation expectations could retrigger bets on an RBA rate hike.
  • US Consumer Sentiment and Fed speakers also need consideration later in the session on Friday.
AUD to USD Forecast

In this article:

Consumer Inflation Expectations, Wage Growth, and the RBA

On Friday (June 14), Australian consumer inflation expectation figures could influence buyer appetite for the AUD/USD.

Economists forecast consumer inflation expectations to increase from 4.1% to 4.3% in June. Upward trends in consumer inflation expectations could retrigger investor bets on a 2024 RBA rate hike.

Inflation remains a bugbear for the RBA, with lackluster consumer spending failing to dampen demand-driven inflationary pressures. However, improving labor market conditions could signal a further pickup in inflationary pressures.

On Thursday (June 13), Australian labor market data likely attracted the attention of the RBA. The unemployment rate fell from 4.1% to 4.0% in May after a 39,700 jump in employment. Tighter labor market conditions may support wage growth and raise disposable income. Upward trends in disposable income could fuel consumer spending and demand-driven inflation.

An RBA interest rate hike would raise borrowing costs and reduce disposable income. Consumers could respond to an RBA rate hike by curbing spending on non-essential items, dampening demand-driven inflation.

Moreover, economic data and stimulus chatter from China also need consideration. New Yuan loans and vehicle sales could move the dial.

US Economic Calendar: Michigan Consumer Sentiment and Fed Speakers

Later in the Friday session, US consumer sentiment figures will be in focus.

Economists forecast the Michigan Consumer Sentiment Index to increase from 69.1 to 72.0. Upward trends in consumer sentiment could signal a pickup in spending. Higher consumer spending could fuel demand-driven inflation, forcing a higher-for-longer Fed rate path.

A more hawkish Fed rate path could affect borrowing costs and reduce disposable income. Downward trends in disposable income could impact consumer spending and dampen demand-driven inflation.

However, investors should consider the sub-components, including the inflation expectations. Higher-than-expected inflation expectation numbers could influence sentiment toward the Fed rate path.

Beyond the numbers, investors should track FOMC member speakers. FOMC Member Austan Goolsbee is on the calendar to speak. Views on inflation and the interest rate trajectory could move the dial.

Short-Term Forecast

Near-term AUD/USD trends will hinge on Australian consumer inflation expectations and US consumer sentiment. A larger-than-expected increase in Australian consumer inflation expectations could tilt monetary policy divergence toward the Aussie dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD hovered above the 50-day and 200-day EMAs, confirming the bullish price signals.

An Aussie dollar move through the $0.67003 resistance level could give the bulls a run at $0.67500. A break above the $0.67500 handle may support a move toward the $0.67967 resistance level.

Australian Consumer Inflation Expectations, Michigan Consumer Sentiment, Michigan Inflation Expectations, and FOMC member chatter need consideration.

Conversely, an AUD/USD break below the $0.6600 handle could signal a drop to the 50-day EMA.

With a 14-period Daily RSI reading of 51.61, the AUD may return to the $0.67500 handle before entering overbought territory.

AUD to USD Daily Chart sends bullish price signals.
AUDUSD 140624 Daily Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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