The AUD/USD pair was at a standstill after the release of Australia’s Consumer Price Index (CPI) for the second quarter. The pair was trading at 0.73592.
AUD/USD Outlook
Australia’s Economic Stance
The AUD/USD pair was almost unchanged after the positive Australia’s Consumer Price Index (CPI). Australia’s quarterly CPI for the second quarter beat economists’ expectations. The index came in higher at 0.8% surpassing the estimated 0.7%.
According to the Australian Bureau of Statistics (ABS), rising fuel prices accounted for the most gains in the June quarter CPI. The prices of fuel surpassed pre-pandemic levels. The automotive fuel prices spiked 6.5%.
Medical and hospital services advanced 2.4% due to an annual increase in private health insurance premiums. Electricity prices rose 3.3% due to the unwinding of the West Australian Government’s $600 electricity credit.
Annual inflation for June 2021 advanced 3.8% hitting expectations. This was an increase from the previous 1.1% in the March quarter. According to the head of price statistics in ABS, annual CPI growth was greatly influenced by the increased price charges due to the coronavirus.
The Australian government is expected to report the future of lockdowns in the country later today. Lockdown restrictions have been eased in most parts of the state. However, NSW recorded the most number of coronavirus cases on Monday.
US Economic Sentiment
US Conference Board Consumer Confidence Index was relatively unchanged in July. The index currently stands at 129.1 up from 128.9 in June. Despite being flat, the Consumer Confidence for July was still at its highest level since February 2020.
Consumers suggest that the third quarter is off to a strong start. They expect businesses, jobs, and financial prospects to improve in the near term. They expect the short-term inflation to also improve, albeit at a slower pace.
The Federal Reserve’s two-day policy meeting will end later in the day. The Fed is expected to report its interest rate decision. Powell’s latest statement gave clues about the Fed’s decision to maintain its monetary stimulus.
The Federal Open Market Committee will issue its monetary policy statement later in the day. According to the Fed chair, the Fed would start discussing the tapering of its stimulus once the economic recovery became stable.
The AUD/USD pair will react to the US weekly initial jobless claims data later in the week. The weekly claims are expected to slip to 380,000 from the previous 419,000. The US GDP data for the second quarter is also due later in the week.
