The Australian Dollar is experiencing a period of strength, trading near sixteen-month highs against the US Dollar. This rally is fueled by robust economic data releases, including positive PMI figures, a surprisingly low unemployment rate, and strong employment change numbers. These factors have reinforced expectations of near-term interest rate hikes by the Reserve Bank of Australia (RBA), bolstering the currency’s value.
- The Australian Dollar is trading near a sixteen-month high around $0.684.
- Composite PMI rose to 55.5 in January, the strongest since April 2022.
- The unemployment rate unexpectedly fell to a seven-month low of 4.1% in December.
- Employment Change arrived at 65.2K in December.
- Swaps markets are pricing in a greater than 50% chance of a rate hike in February.
- Strong PMI data reinforced the likelihood of tighter monetary policy from the RBA.
- TD-MI Inflation Gauge rose to 3.5% year-over-year in December.
The prevailing economic indicators point towards a strengthening Australian economy, providing a foundation for further gains for the currency. The anticipation of tighter monetary policy, driven by solid employment figures, rising inflation gauges, and positive economic activity, is likely to support the Australian Dollar in the near term. The focus now shifts to upcoming inflation data releases, which could further solidify the case for continued rate hikes and subsequently impact the currency’s trajectory.