Australian Dollar Holds Steady as Traders Wait for Fed Clarity
The Australian dollar (AUD) is trading flat against the U.S. dollar (USD) after a five-day winning streak, as markets pause to get clearer signals from the Federal Reserve. Traders are anxious for upcoming U.S. labor and inflation data to better judge the Fed’s direction and the chance of a rate cut this month.
Meanwhile, stronger-than-expected Australian inflation data (July CPI at 2.8%) makes a near-term interest rate cut by the Reserve Bank of Australia (RBA) less likely. This inflation figure supports the AUD by reducing pressure on domestic monetary easing.
Markets are currently pricing in nearly a 90% chance of a 25 basis point Fed rate cut at the September meeting, based on the CME FedWatch tool. The balance between weak U.S. data and firmer Australian inflation is keeping the AUD/USD pair in a tight range between 0.6400 and 0.6600.
Investors are also closely watching global cues—from China’s PMI data to RBA commentary—looking for catalysts that could break the current range. Until then, the pairing remains cautious, reflecting conflicting signals from both central banks and a broader wait-and-see tone.
Impact:
With Fed rate-cut bets rising and Australia’s inflation holding firm, the AUD may benefit modestly, while the USD remains under pressure, keeping AUD/USD rangebound.
