The Australian Dollar got a lift on Monday after China announced a stamp duty cut on stock trades “to invigorate the capital market and boost investor confidence.”
Additional boost came on the back of a softer US Dollar, which pulled back from a 12-week high, after Federal Reserve Chair Jerome Powell did not rule out the possibility of further interest rate hikes.
Speaking at the annual Jackson Hole Economic Policy Symposium, Powell promised careful moves at upcoming policy meetings and highlighted progress on easing price pressures.
“We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data,” the Fed Chair said in a speech on Friday.
Futures markets are now pricing an 80% chance that the Fed will leave rates unchanged in September. However, there is a 48% chance of a 25 basis point rate increase in November, compared with a 33% chance a week ago.
On the macro data front, market focus this week will be set on US Non-Farm Payrolls, core PCE inflation and personal spending figures.
“If the data continues to show an easing in labour market tightness and price pressures, then the Fed is likely done with its tightening cycle,” Rodrigo Catril, senior currency strategist at National Australia Bank, was quoted as saying by Reuters.
“If the data doesn’t play ball, then further tightening should be expected.”
Meanwhile, data by the Australian Bureau of Statistics showed that retail sales in the country had risen 0.5% month-over-month in July, while exceeding market consensus of a 0.3% growth.
The figures gave the Reserve Bank of Australia room to maintain its monetary policy restrictive.
As of 7:09 GMT on Monday AUD/USD was edging up 0.29% to trade at 0.6420.
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