FX.co ★ Australian Dollar Gains Ground

On Thursday, the Australian dollar experienced a modest rise, reaching approximately $0.659, recovering from the previous day's decline. This uptick was attributed to diminishing expectations of domestic policy easing, which offset the robust performance of the US dollar. Recent data revealing a 3.0% increase in Australia's monthly CPI for August, exceeding the anticipated 2.9% and marking the fastest pace in a year, prompted investors to reassess the likelihood of imminent policy easing by the Reserve Bank of Australia (RBA). Currently, the market reflects a mere 6.5% probability of a quarter-point rate reduction at the upcoming RBA meeting and a 38.2% chance of such a cut at the following meeting in November. Analysts pointed out that the stronger-than-expected CPI print bolstered the RBA's data-driven policy approach, leaving the timing of rate cuts uncertain. Concurrently, the Australian dollar was pressured by the US dollar's strength, following Federal Reserve Chair Powell's cautious remarks on further easing, emphasizing the need to balance inflation risks with a weakening labor market. Attention now shifts to the upcoming PCE data on Friday, a crucial indicator for the Fed's future actions.