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Aussie falls as Inflation Expectations rise

Aussie falls as Inflation Expectations rise


Today, the Australian dollar extended its losses. The AUD/USD exchange rate is currently at 0.6412 which is down 0.2%.

After a 3-day slide that saw the Australian currency rise more than 200 points, US dollars have now rebounded. The Aussie has coughed up half of those gains since Tuesday, and we could be in for further volatility in today’s North American session, as the US releases the October inflation report. Investors are somewhat confused, thanks to mixed signals from both the Federal Reserve and last week’s US employment report.

The Fed meets next in mid-December, and it’s close to a toss-up as to whether the Fed will raise rates by 0.50% or 0.75%. At the last meeting, at which the Fed hiked by 0.75%, Fed Chair Powell hinted at easing up on rates but also said that the terminal rate would likely be higher than previously expected – this mixed message makes it difficult to peg the Fed as being hawkish or dovish.

Inflation in the USA expected to remain high

Last week’s employment report was mixed, as unemployment and wage growth climbed, while nonfarm payrolls fell but still exceeded expectations. This makes today’s inflation report all the more important for the Fed ahead of the December meeting. Hot inflation reports would likely increase the…

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