FX.co ★ Aussie Dollar Set for Weekly Decline

On Friday, the Australian dollar continued to hover around $0.649, following an overnight strengthening of the US dollar. This surge in the greenback came after an unexpectedly robust US producer inflation report, which tempered expectations for aggressive rate cuts. For July, producer prices in the US increased at their quickest rate in three years, differing from a more favorable consumer inflation report released earlier in the week. This suggests a widening of inflationary pressures, potentially complicating the Federal Reserve's upcoming policy decisions. Consequently, the likelihood of a 25-basis-point rate cut by the Federal Reserve has slightly diminished, as indicated by the CME’s FedWatch tool. In Australia, investor sentiment remains wary ahead of significant data releases expected next week, such as consumer inflation expectations, consumer confidence, and various PMI surveys. This caution persists especially in light of recent employment data, which highlighted continued strength in the labor market. Overall, the currency is poised to register a loss for the week.