AUDUSD Analysis: December 29, 2023

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AUDUSD Analysis – In 2023, the Australian dollar exhibited stability, hovering around $0.685. As we approach year’s end, it shows minimal overall change. This steadiness, however, masks underlying pressures. Initially, the Australian currency faced challenges, primarily due to the Reserve Bank of Australia’s (RBA) slower pace in raising rates compared to the US Federal Reserve.

This AUDUSD analysis delves into these intricate market dynamics.

audusd analysis

AUDUSD Analysis | Daily Chart

Reuters – Towards the latter part of the year, a shift occurred. Expectations emerged that the Federal Reserve might reduce rates early in the next year. This speculation was fueled by signs of declining inflation in the US, leading to predictions of a rate cut as early as March. This development weakened the US dollar, simultaneously boosting the Australian dollar to its highest in over five months.

HubuFx Analysts note a key point in our AUDUSD analysis: the RBA may lag behind its global counterparts in moving towards an easing cycle. Its less aggressive rate hikes could mean shallower or delayed reductions in rates. Additionally, Australia’s inflation scenario presents its own challenges.

Unlike other economies, inflation here has been more persistent. RBA Governor Michele Bullock’s recent remarks underscore this, pointing to domestic demand-driven inflationary pressures.

Market projections currently don’t foresee the RBA cutting rates until late 2024. This AUDUSD analysis indicates a complex interplay of global economic factors, impacting the currency pair significantly.