**Australian Dollar Strengthens Against US Dollar Ahead of Crucial US Economic Data**
*Adapted from the original article by VT Markets.*
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The Australian dollar (AUD) has risen above the 0.6700 level versus the US dollar (USD) as the foreign exchange market anticipates upcoming economic releases from the United States. This movement is occurring within a broader context of US dollar weakness and evolving market expectations regarding Federal Reserve interest rate policy. Below, we delve into the factors fueling the AUD/USD pair’s ascent, analyze upcoming economic data, and assess current market sentiment.
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## Overview: AUD/USD Rallies Past 0.6700
The AUD/USD currency pair has shown notable strength, recently breaking above the 0.6700 threshold. This upward movement reflects a combination of:
– Broader weakness in the US dollar
– Supportive domestic data for the Australian economy
– Shifting expectations regarding US monetary policy
– Global risk sentiment returning to favor ‘risk-on’ assets
Rising above 0.6700 is significant as it represents both a key psychological level and a technical resistance for the AUD/USD pair. The move comes as traders adjust their positions ahead of a series of high-impact data releases from the United States, which are likely to shape currency market trends in the coming days.
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## What’s Driving the AUD/USD Upswing?
Several interlinked factors are currently supporting the Australian dollar:
### 1. US Dollar Weakness
The USD has weakened against most major currencies in recent days, reflecting:
– Lower-than-expected US inflation data, with recent Consumer Price Index (CPI) prints undershooting analyst forecasts. This has led to speculation that the Federal Reserve is nearing the end of its current rate-hiking cycle.
– Federal Reserve officials, including Chair Jerome Powell, reiterating a cautious approach to further rate increases and emphasizing data-dependence.
– Market participants pricing in a higher likelihood of Fed rate cuts by the end of 2024, as growth indicators suggest a cooling US economy.
– A retreat from safe-haven assets, with investors turning towards higher-yielding or riskier markets, benefitting the AUD as a risk-sensitive currency.
### 2. Supportive Australian Economic Data
The Australian economy has shown resilience amid global uncertainties:
– Recent jobs data from Australia reported better-than-expected employment growth, outpacing consensus and reinforcing positive economic fundamentals.
– The Reserve Bank of Australia (RBA) has maintained a hawkish tone, expressing concerns about persistent domestic inflation. Although the RBA left its benchmark rate unchanged at its last meeting, the central bank’s language suggested no rush towards easing, in contrast to the dovish pivot in other jurisdictions.
– Robust Chinese economic data has indirectly bolstered the Australian dollar, as China is Australia’s largest trading partner and key commodity customer.
### 3. Commodity Price Performance
Australia is a major exporter of commodities, and stronger prices in the following have supported the AUD:
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