Aussie Inflation Data and Its Impact on AUD/USD Forecast

Aussie Inflation in the Spotlight

On Monday, October 7, Australian inflation numbers could impact buyer demand for the AUD/USD. Economists expect the TD-MI Inflation Gauge to increase by 0.3% in September after dropping by 0.1% in August. The TD Securities-Melbourne Institute Monthly Inflation Gauge is a weighted measure of goods and services price changes. Economists consider the Index a leading indicator for consumer prices.

An upward trend in the Index could indicate higher consumer prices. This would align with the RBA’s recent warning that the dip in headline inflation may be short-lived. If inflation expectations rise, investors could reduce bets on a Q4 2024 RBA rate cut, possibly pushing the AUD/USD toward $0.68500.

RBA Outlook for Inflation

During the recent RBA press conference, RBA Governor Michele Bullock cautioned about inflation trends, “It may be that the headline inflation rate could come within the target range, but it may not reflect underlying inflation.” The RBA Rate Statement also revealed Board Members’ views on inflation: “Inflation is expected to temporarily decline in July, but forecasts indicate it will not return sustainably to target until 2026.”

US Economic Calendar: FOMC Member Speeches in Focus

Meanwhile, investors should monitor FOMC Member speeches later in the Monday session. FOMC Members Bowman and Kashkari are on the calendar to speak. Investors should consider their reactions to Friday’s US Jobs Report and insights into future interest rate decisions.

Short-Term Forecast for AUD/USD

Near-term AUD/USD trends will likely hinge on inflation figures from Australia and FOMC member commentary. Higher inflation signals could boost Aussie dollar demand on expectations of a 2025 RBA rate cut. On the other hand, FOMC member support for aggressive Fed rate cuts may tilt monetary policy divergence in favor of the Aussie dollar.

A narrowing of the interest rate differential between the US and Australia could support an AUD/USD return to $0.68500. Investors should closely monitor central bank signals and economic indicators, which could influence AUD/USD trends.