The Australian dollar (AUD) gained 0.38% on Friday as the U.S. dropped on expectations that the U.S. interest rates may have peaked.
Possible effects for traders
It’s incredibly quiet, as you’d expect on the day after Thanksgiving, with liquidity still pretty thin and volumes again on the light side,’ said Michael Brown, the market analyst at Trader X in London. Generally speaking, the market thinks the U.S. economy has reached a cyclical downturn, and more rate increases are unwarranted. AUDUSD has been trading in a bullish trend since 27 October, but future gains depend on inflation data and the monetary policy stance of the Reserve Bank of Australia (RBA). Shane Oliver, the chief economist at AMP, expects the Australian dollar to rise next year, citing reasons such as the currency being undervalued, favourable interest rate difference, rebounding commodity prices, and Australia’s solid current account surplus.
AUDUSD was rising during the Asian and early European session. Today’s trading session is expected to be relatively quiet, as there are no major economic reports. However, Wednesday’s Australian monthly inflation report will be important to watch. In addition, tomorrow’s speech by the RBA governor Michele Bullock at 1:20 a.m. UTC may give clues on the future interest rate path.