Meanwhile, rising bets on an August RBA rate cut will continue to influence the AUD/USD pair. June’s labor market data raised expectations of multiple RBA rate cuts after the unemployment rate unexpectedly rose from 4.1% in May to 4.3% in June.
The June report followed the July 8 RBA decision to keep interest rates at 3.85% to gain confidence that inflation was sustainably returning to the mid-range of the 2-3% target band. RBA Governor Michele Bullock stated that an August rate cut hinged on the quarterly CPI print since the unemployment rate was low relative to history. Further deterioration in the labor market and persistently soft inflation may force the RBA to cut rates more aggressively.
The AUD/USD pair dropped 0.60% on July 17 to close at $0.64882 amid growing expectations of a more dovish RBA policy stance.
AUD/USD Daily Outlook: US Consumer Confidence and Rate Differentials
Later today, the Michigan Consumer Confidence numbers will likely influence US-Australian interest rate differentials and AUD/USD trends.
A sharper rise in consumer confidence could signal a less dovish Fed rate path, widening the rate differential in favor of the greenback. A wider rate differential could pull AUD/USD below the 50-day EMA and bring the 200-day EMA into play. Conversely, weaker confidence may boost bets on a September Fed rate cut. A narrowing rate differential could send the pair toward $0.6550.
