AUD/USD Experiences Slight Declines Near 0.6820 In Moderate Trading
Wednesday's AUD/USD fluctuates near 0.6823 amidst low trading volume. For November, the Core Personal Consumption Expenditures Price Index (Core PCE) increased by 3.2% year-over-year and 0.1% month-over-month. According to the minutes of the RBA, any additional tightening will be contingent on incoming data. The US Richmond Fed Manufacturing Index for December is scheduled to be released on Wednesday.

Wednesday morning, the AUD/USD pair experiences moderate declines during the Asian trading session. Nevertheless, the pair's decline is constrained due to the expectation that the dovish Fed narrative will maintain pressure on the US Dollar (USD). During the final week of the year, when trading is light, the market will be subdued. At present, AUD/USD is trading near 0.6823, a decrease of 0.02% on the day.
The December reading of the US Dallas Fed Manufacturing Business Index was -9.3 on Tuesday, down from -19.9 the previous day. In contrast, the Chicago Fed National Activity Index for November decreased by 0.49 points to 0.03 points. December's Philadelphia Fed Non-Manufacturing Index rose to 6.3 from a previous reading of 11.0.
On Friday, the US Bureau of Economic Analysis reported that the Core Personal Consumption Expenditures Price Index (Core PCE) for November increased by 0.1% month-over-month and 3.2% year-over-year. There was minimal market reaction to the report. While not yet prepared to proclaim triumph over inflation, the deceleration in core inflation provides an opportunity for the Federal Reserve to reduce the funds rate in 2024. In the following months, however, the timing will be determined by core PCE figures.
Despite noting "encouraging signs" of declining inflationary pressures throughout the economy, the Reserve Bank of Australia (RBA) minutes indicated that the central bank might increase interest rates once more. Any additional tightening, according to the minutes, would be contingent on the impact of incoming data on the economic outlook and the evolving risk assessment.
The December US Richmond Fed Manufacturing Index is scheduled for release on Wednesday of this week, followed by the weekly Initial Jobless Claims report on Thursday. The financial markets are anticipated to remain comparatively tranquil in the run-up to the New Year holiday.
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