Australian Dollar's Steady Rise, Market Sentiment Optimistic
On Friday (August 29th) during the Asian trading session, the Australian dollar continued its upward trend against the US dollar, trading around 0.6533, marking the fourth consecutive day of gains. The recent weakening of the US dollar, driven by dovish Federal Reserve policy expectations, has provided external momentum for the Australian dollar. At the same time, strong domestic data from Australia has maintained a positive market attitude toward the Australian dollar's performance.
Credit Growth Shows Economic Resilience
Recent data shows that Australia's private sector credit grew by 0.7% month-on-month in July, not only higher than the 0.6% in the previous two months but also marking the fastest growth since April. Year-on-year, the growth rate reached 7.2%, the highest level since February 2023. This data has strengthened market confidence in Australia's economic vitality and, to some extent, eased expectations of a rate cut.
Inflation Exceeds Expectations Supporting Monetary Policy Stance
Australia's monthly CPI rose by 2.8% year-on-year in July, significantly higher than the previous value of 1.9% and the market expectation of 2.3%. The unexpectedly high inflation reduces the likelihood of a near-term rate cut by the Reserve Bank of Australia. Analysts point out that if inflation remains above the 2%-3% range, the central bank may be more cautious in signaling easing.
However, the minutes from the RBA's August meeting still emphasize the potential need to further lower the cash rate over the next year, indicating that policy direction will continue to depend on data performance.
US Dollar Trend Remains Uncertain
The US dollar index is currently hovering around the 98 mark. Although the US annualized GDP for the second quarter rose to 3.3%, slightly above expectations, market focus is more on the upcoming July PCE price index. This data is seen as a key indicator ahead of the Fed's September policy meeting, with expectations of a year-on-year rise to 2.6% overall and 2.9% for the core index.
Meanwhile, US President Trump's decision to dismiss a Federal Reserve governor and the threat of additional tariffs on the tech industry have further compounded market concerns about Fed independence and future policy direction. These factors have pressured the US dollar, indirectly supporting the Australian dollar.
China's Influence Cannot Be Overlooked
As Australia's most important trading partner, China's economic performance has a profound impact on the Australian dollar's trend. Recently, news has surfaced about Chinese chip manufacturers planning to increase AI processor production, along with renewed trade tensions between China and the US. These developments prompt traders to remain cautious while being bullish on the Australian dollar, highlighting the complexity of geopolitical and trade dynamics.
Technical Aspects Show a Clear Bullish Trend
The daily chart shows the AUD/USD stabilizing above the 9-day exponential moving average (0.6502), indicating strong short-term price momentum. The Relative Strength Index (RSI) remains above the midline, suggesting a bullish dominance. If the exchange rate breaks through the 0.6550 level, it is expected to further test the key resistance levels of 0.6568 and 0.6624.
Support is concentrated in the 0.6500 area; if this is breached, a bearish correction targeting the 0.6414 zone may be triggered. However, against the backdrop of renewed market risk appetite, investors generally believe that the Australian dollar is more inclined to maintain an upward pace.
Conclusion
With the Federal Reserve's dovish tone intensifying and Australian economic data remaining robust, the AUD/USD exhibits resilient upward momentum. Although global uncertainties persist, in the short term, the market expects the Australian dollar to continue challenging key resistance levels, emerging as one of the highlights among major non-US currencies.
