The current market bias for the AUD/USD exchange rate is cautiously bullish.
Key drivers include:
- Interest rate expectations show the Reserve Bank of Australia may raise rates early next year, enhancing the AUD's appeal.
- The U.S. dollar has weakened following a drop in U.S. inflation, which supports further dollar depreciation in the near term.
- Rising commodity prices are likely to support the AUD, given its status as a commodity currency.
In the near term, the AUD/USD pair is expected to trade within a stable range, reflecting its recent stability and maintaining a slight upward tendency.
An upside risk could arise if global demand for Australian commodities continues to increase, providing additional support for the AUD. On the downside, any U.S. economic indicators indicating unexpected strength or improved investor sentiment could bolster the USD, pressuring the AUD lower.
