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Source: Newsmaker.id
The AUD/USD pair traded around 0.6905 on Tuesday (November 10), down 0.31% following a strong rebound. The Australian dollar came under renewed pressure as expectations for a Federal Reserve interest rate hike intensified, compounded by a deterioration in sentiment after trade data from China—Australia’s largest trading partner—fell short of forecasts.
China’s trade surplus narrowed to US$105.28 billion in October, down from US$133.53 billion in September and below the market expectation of US$125.8 billion. Although both Chinese exports and imports continued to grow on an annual basis, the smaller surplus provided little support for the Australian dollar.
Meanwhile, the US dollar received a boost from growing expectations of a tighter monetary policy from the Fed. The market now assigns a roughly 99% probability to a 25-basis-point interest rate hike in December—a sharp increase from 84% the previous day. Fed Governor Christopher Waller also emphasized the necessity of rate hikes to exert downward pressure on inflation.
Investor attention has now shifted to the US Consumer Price Index (CPI) for October. Headline inflation is expected to rise by 0.3% month-on-month, slowing from 0.6% in September, while core CPI is projected to grow by 0.2%, down from 0.3% previously. The data will serve as a key indicator of how aggressively the Fed may need to maintain its monetary policy stance.
Newsmaker Analysis: If the US CPI comes in higher than expected, expectations for Fed tightening could strengthen further, placing additional pressure on the AUD/USD pair. Conversely, lower-than-expected inflation could weaken the US dollar, potentially allowing the Australian dollar to recover some of its recent losses. (arl)
Source: Newsmaker.id