The AUD/USD pair continues to engage in a horizontal market pattern above the significant support level of 0.6800 during the Tokyo session. Despite the Reserve Bank of Australia (RBA) minutes affirming the necessity for further interest rate increases, the Australian currency has struggled to gain momentum.
During the July monetary policy meeting, RBA policymakers expressed a positive outlook on the Australian economy, leading to the decision to maintain the current interest rates. Weak consumer spending and a modest Gross Domestic Product (GDP) growth of approximately 0.2% in the second quarter exemplified the repercussions of the RBA’s aggressive tightening measures.
It is worth noting that there exists a notable disparity between the interest rates set by the RBA and those established by other developed nations, leaving room for potential future rate hikes.
This week, investors will closely monitor Australia’s Employment data, scheduled for release on Thursday at 01:30 GMT. According to consensus estimates, the data is anticipated to reveal a meager increase of 17,000 in payrolls, a significant drop from the previous release of 75,900. The Unemployment Rate is expected to remain stable at 3.6%.
In the Asian markets, S&P500 futures have displayed slight losses, reflecting a cautious sentiment among market participants. On Monday, US equities registered notable gains, as investors speculate that the Federal Reserve (Fed) may have limited options for managing inflation through further interest rate hikes.
The US Dollar Index (DXY) has retraced to near its critical support level of 99.75 after failing to sustain a position above the psychological resistance of 100.00. The United States Retail Sales data for June, set to be published at 12:30 GMT, is poised to provide additional impetus for the US Dollar Index.
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