The Australian dollar rose Monday after China announced a cut in stamp duty on stock deals “to stimulate capital markets and boost investor confidence.”
Additional support came from a weaker US dollar, which retreated from a 12-week high after Federal Reserve Chairman Jerome Powell did not rule out the possibility of further rate hikes.
Speaking at the annual Jackson Hole Economic Policy Symposium, Powell pledged a cautious approach to forthcoming policy meetings and highlighted progress in reducing price pressures.
“We will be careful in deciding whether to continue tightening monetary policy or instead hold interest rates steady and await further data,” the Fed Chair said in a speech on Friday.
Futures markets are now estimating an 80 percent chance that the Fed will leave rates unchanged in September. However, there is a 48% chance of a 25 basis point rate hike in November, compared to a 33% chance a week ago.
In terms of macro data, this week’s market focus will be US Non-Farm Payrolls, PCE Core Inflation and Personal Spending figures.
“If the data continues to show an easing in labor market tightening and inflationary pressures, the Fed is likely to be through with its tightening cycle,” Rodrigo Catril, senior currency strategist at the National Australia Bank, was quoted as saying by Reuters.
“If the data is not correct, further tightening can be expected.”
Meanwhile, data from the Australian Bureau of Statistics showed that retail sales in the country rose 0.5% mom in July, beating the market consensus of 0.3% growth.
The figures gave the Reserve Bank of Australia leeway to maintain its tight monetary policy.
On Monday at 7:09 GMT, AUD/USD is up 0.29% to trade at 0.6420.
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