# AUD/USD Gains as Traders Brace for Australia’s Q3 Inflation and Fed Decision
**Source:** Adapted and expanded from information by FXStreet (originally authored by Anil Panchal), with additional analysis from related financial sources.
## Overview
The Australian Dollar (AUD) showed resilience and edged higher against the US Dollar (USD) in the early hours of the Asia-Pacific session. Market participants are increasingly focusing on two critical developments: Australia’s third quarter inflation data and the upcoming US Federal Reserve monetary policy decision. Both events are poised to play a pivotal role in determining the next directional move for the AUD/USD pair. As traders balance expectations, the currency pair’s performance offers valuable insights into wider trends in the foreign exchange market.
## Recent Price Action
– **AUD/USD Firmness:** The currency pair has maintained an upward trajectory, advancing from multi-week lows recorded in previous sessions.
– **Support Levels:** Technical charts indicate that AUD/USD is finding support amid a backdrop of shifting market sentiment regarding US monetary policy.
## Drivers of AUD/USD Movements
Several factors currently influence the AUD/USD exchange rate, including:
– Anticipation of Australia’s Q3 Consumer Price Index (CPI) release
– Cautious sentiment ahead of the US Federal Reserve’s November policy statement
– Fluctuations in the US Dollar as global risk appetite shifts
– Evolving outlook for interest rates in both Australia and the United States
### Australia’s Inflation in Focus
Australia is set to publish its Q3 CPI data, an event highly anticipated by currency traders and policy analysts. The inflation report will serve as a vital input for the Reserve Bank of Australia (RBA) as it shapes future interest rate decisions.
– **Previous Quarter Inflation:** Australian Q2 CPI rose by 0.8 percent quarter-on-quarter, with year-on-year inflation at 6 percent.
– **RBA’s Target:** The central bank operates within an inflation target range of 2 to 3 percent.
– **Consensus Expectation:** Analysts polled anticipate a moderation in headline inflation for the third quarter, with some estimates envisioning a quarterly rise around 1.1 percent and an annual pace closer to 5.3 percent.
– **Importance of Trimmed Mean CPI:** The RBA closely monitors the trimmed mean measure, which excludes volatile items and smooths out swings. Expectation for Q3 is set at a 1.0 percent quarterly increase and a 5.0 percent annual pace.
– **Implications for the RBA:** A hotter-than-expected inflation print could prompt speculation about tighter monetary policy from the central bank, supporting the AUD. Conversely, a weaker number may reinforce expectations of a prolonged rates pause.
#### Historical Context
According to the Reserve Bank of Australia’s recent statements, price pressures have shown signs of easing. However, inflation remains above target, which continues to concern policymakers. The upcoming CPI data will be essential in shaping the central bank’s policy direction heading into
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