22.08.202502:24:49UTC+00Aussie Dollar Set for Second Weekly Drop

The Australian dollar showed little movement on Friday, maintaining its position around $0.642. This pause came after four consecutive sessions of declines, yet the currency was still looking at a 1.3% weekly drop, marking its second consecutive weekly decrease. The pressure on the Australian dollar predominantly stemmed from the strength of the US dollar, which was set for a robust weekly performance as global markets anticipated Federal Reserve Chair Jerome Powell’s address at Jackson Hole. This speech is expected to provide insight into the near-term direction for interest rates. Earlier in the week, weaker US employment data had sparked hopes for more aggressive rate cuts, but cautious commentary from the Federal Reserve and ongoing inflation concerns have led the market to anticipate a more modest adjustment in September. Domestically, the market is nearly fully aligned with expectations for a further 25 basis point reduction by the Reserve Bank of Australia in September, potentially lowering rates to 3.35%, with additional easing anticipated towards 3.10%. Concurrently, a noticeable increase in business activity offered some support to the Australian currency, with manufacturing activity accelerating to 59.2 in August and the services sector climbing to 55.1 from 54.1 in the previous month.