Australian Dollar Holds Steady After Initial Gains Amid Stable US Dollar

The Australian Dollar (AUD) maintained a steady position on Monday after paring earlier gains as the US Dollar (USD) continued to undergo a corrective pullback. The USD’s downward trajectory was partly driven by optimism in bond markets following President-elect Donald Trump’s nomination of Scott Bessent as Treasury Secretary. Bessent, known for his fiscal conservatism and Wall Street experience, contributed to improved market sentiment.

Key Drivers for AUD Strength:

Global and Domestic Market Optimism:
- The AUD benefited from robust foreign inflows as Australia’s equity markets surged to record highs.
- The S&P/ASX 200 Index climbed 0.63% to exceed 8,450 points, mirroring Wall Street’s rally, with the Dow Jones closing at record highs on Friday.
Hawkish RBA Outlook:
- The Reserve Bank of Australia (RBA) reinforced its commitment to restrictive monetary policy until inflation sustainably aligns with its target range.
- The RBA emphasized a data-dependent approach for future decisions, keeping markets attentive to incoming economic indicators.
Upcoming Domestic Data Focus:
- Traders are eyeing Australia’s October Monthly Consumer Price Index (CPI) as a pivotal release that could influence expectations regarding the RBA’s next policy moves.

Outlook for the AUD/USD Pair:
While the AUD finds support from improved risk sentiment and a steady RBA stance, its trajectory will largely depend on upcoming data releases and broader USD dynamics. A sustained rally in Australian equities and solid inflation data could further strengthen the currency, while any shifts in global risk appetite or USD recovery may temper its gains.

Markets remain focused on domestic CPI figures and potential updates from the US Federal Reserve, both of which will play a crucial role in determining the near-term path of the AUD/USD exchange