Aussie dollar climbs to multi-month high ahead of RBA decision
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Daily Currency Update
The Australian dollar (AUD) continued its upward momentum against the US dollar (USD) on Friday, pushing the AUD/USD pair to its strongest level since September 18. The move reflects growing confidence among traders that the Reserve Bank of Australia (RBA) will keep interest rates unchanged at its upcoming meeting on December 9. With market expectations largely aligned, investors appear comfortable positioning themselves ahead of the decision, helping to support the Aussie dollar’s recent climb. At the time of writing, the AUD/USD pair is trading near 0.6628, placing it on track for its second consecutive weekly gain. This steady performance signals that traders are increasingly optimistic about Australia’s economic outlook, as well as its ability to navigate global financial uncertainty. It also suggests that the Australian dollar is benefiting from a mix of stable domestic conditions and shifting expectations around US monetary policy. On the technical front, the immediate level to watch on the upside is 0.6650. This price zone has become a short-term resistance point, meaning the currency pair has struggled to break above it decisively. If buyers manage to push the Aussie past this level and hold it there, it could pave the way for a more extended rally. A break above 0.6650 would bring the next key milestone into focus: the current year-to-date high at 0.6707, which was last reached on September 17. This level also marks the strongest point for the pair since October 2024, making it an important psychological and technical barrier. Traders often pay close attention to such historical highs, as surpassing them can generate fresh bullish momentum and encourage additional buying interest. Should the upward trend continue beyond that, attention would naturally shift toward the next major psychological threshold at 0.6800. Round numbers like this tend to attract interest from both short-term traders and long-term investors, as they often act as magnets for price movements. A sustained push toward 0.6800 would signal a robust recovery for the Australian dollar and could mark a significant shift in broader market sentiment. Overall, the Australian dollar’s recent performance reflects a blend of favourable domestic expectations and cautious optimism in global markets. While the upcoming RBA decision could influence the next major move, the currency currently appears well-supported. If market conditions remain steady and buyers maintain their momentum, the AUD/USD pair may have room to extend its gains in the weeks ahead.Key Movers
American consumer confidence showed a modest but encouraging improvement in early December, according to preliminary figures released on Friday by the University of Michigan (UoM). The uptick suggests that households are feeling slightly more positive about both their current financial situations and the broader direction of the US economy as the year draws to a close. The headline Consumer Sentiment Index, one of the most closely watched measures of how Americans perceive economic conditions, rose to 53.3 in December. This marks an increase from November’s reading of 51 and comes in above the consensus forecast of 52. While sentiment remains well below historical averages, the improvement indicates that consumers may be gradually regaining confidence after months of concern over inflation, interest rates and economic uncertainty. A closer look at the report reveals a mixed but generally optimistic set of underlying details. The UoM’s Current Conditions Index, which reflects how households feel about their personal finances and the present state of the economy, dipped slightly to 50.7 from 51.1. Although this represents a small decline, the measure remains relatively stable, suggesting that consumers’ day-to-day assessment of economic conditions has not significantly worsened. More encouraging is the movement in the Consumer Expectations Index, which tracks how households view economic prospects over the next six months. This measure climbed to 55 in December, up sharply from November’s reading of 51. The improvement points toward growing optimism among consumers about the economic outlook for early 2025. Expectations are a key component of the sentiment survey, as they influence household spending decisions, which in turn play a major role in shaping the broader economy. Another notable development in the December report involves inflation expectations—a critical element for policymakers at the Federal Reserve. The survey showed that short-term inflation expectations fell meaningfully. The one-year outlook eased to 4.1%, down from 4.5% in November. Longer-term expectations also moderated, with the five-year forecast slipping to 3.2% from 3.4%. Although these figures are still above the Fed’s 2% inflation target, the downward trend may provide some reassurance that consumers believe price pressures will continue to gradually cool. Overall, the preliminary December data paints a cautiously optimistic picture. While Americans remain mindful of economic challenges, the improvement in sentiment, particularly expectations for the months ahead, suggests that consumers are beginning to feel slightly more at ease. If inflation continues to ease and the job market remains resilient, this budding confidence could help support stronger economic activity in the early part of next year.Expected Ranges
- AUD/USD: 0.6530 - 0.6730 ▲
- AUD/EUR: 0.5600 - 0.5800 ▲
- GBP/AUD: 2.0050 - 2.0250 ▼
- AUD/NZD: 1.1350 - 1.1550 ▲
- AUD/CAD: 0.9050 - 0.9250 ▲