Australian Dollar struggles as US data and trade fears weigh
Express News | Australia clears the way for interest rate cuts in February to alleviate inflationary pressures.
In Australia, the main inflation indicators cooled down in November, with a 70% possibility of interest rate cuts in February.
An important indicator of inflation in Australia decreased in November, approaching the Reserve Bank of Australia's target Range, indicating that policymakers may have room to consider easing MMF policy sooner. Data released by the Australian Bureau of Statistics on Wednesday (January 8) showed that the closely watched November core CPI trimmed mean fell from 3.5% the previous month to 3.2%. This Indicator excludes volatile items and is a focus for the Reserve Bank of Australia. Following the data release, the Australian Dollar to US dollar Exchange Rates slightly fell. The sensitive three-year government bond yields also dropped, while the benchmark stock index rose.
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Inflation supports the Reserve Bank of Australia to cut interest rates, but employment data may delay the timing of the rate cut.
On January 8, Gelonghui reported that Moody's economist Harry Murphy Cruz stated that Australia's latest inflation data provides a reason for interest rate cuts, but the increase in job vacancies will cause the Reserve Bank of Australia to hesitate. Core inflation was revised in November, returning to a two-and-a-half-year low from September. However, job vacancies also saw their first increase since May 2022, indicating that the labor market is tightening. An unyielding labor market is a concern for the Reserve Bank of Australia, which has indicated that the unemployment rate needs to rise before there is sufficient confidence to cut interest rates. Given that the job market remains strong, a rate cut in February seems justified.