FX.co ★ Australian Dollar Gains on Cautious RBA Tone

On Friday, the Australian dollar rose to approximately $0.657, recovering from a near two-week low encountered the previous day. This increase followed the cautious comments of RBA Governor Michele Bullock. Bullock noted that, while services inflation remains persistently high, second-quarter inflation was slightly beyond forecasts yet headed in the right direction. She pointed out the need for caution due to unpredictable monthly CPI data and highlighted that the labor market, although still tight, is approaching a balanced state. Presently, it is widely anticipated that the central bank will keep its policy rate unchanged, following the decision to hold it at 3.6% in September. Despite this, the Australian dollar is poised for moderate weekly losses amid the strength of the US Dollar. The continuing government shutdown and the weaknesses in other major currencies have bolstered the greenback. Nonetheless, differing outlooks from the RBA and Fed could lend support to the AUD, with markets factoring in a strong possibility of Fed rate cuts in October and December due to labor market concerns.