Australian economy: The Australian dollar is more affected by the difference in interest rates between Australia and the United States.

In appearance, the conditions are in favor of the dollar. The market expects the US Federal Reserve to raise interest rates at December meeting. At the same time, future markets in Australia still do not believe in raising interest rates until 2018. That means the US and Australian interest rates will be equal by the end of 2017, which will cause the AUD to lose its advantage of interest rates in a condition that the Federal Reserve raised interest rates to 1.5% at the December meeting.

The AUDUSD rate has made peak since early September 2017 and dropped. However, last week we saw improvement in the rate. Australian consumer confidence evaluation was promising and led to the strengthening of the Australian dollar, but the views of an Australian Reserve bank were also significant. Harper, in his latest remarks, said that if the power of consumer spending is reduced, the interest rate can be reduced too. Although this commentary was the only reflection of a clear subject, in the conditions that the market expects a rise in interest rates if the officials make a speech, it could be worrying.

Last week, AUD was also strengthened by inflation expectations. The improvement of Australian inflation expectations is in contradiction with the situations in the US. Federal Reserve officials are worried that inflation may not be temporary. Last week, the Australian Reserve’s Financial Stability Report was also good, and despite concerns about the level of consumer debt, the Bank had a positive outlook for the Australian economy. This week, two important reports for the Australian dollar will be released: Australian employment data and China’s gross domestic product. Both reports are published on Thursday and can move the Australian dollar easily. If both indicators be released, we will see AUD rising in the market. However, none of them are so powerful to change Australian monetary policy.