AUD/USD extends correction to near 0.6700 as Australian Trade Balance narrows

 The AUD/USD pair retraces further to near 0.6690 during the European trading session on Thursday from its over-a-year high of 0.6766 posted the previous day. The Aussie pair corrects sharply as the Australian Dollar (AUD) has come under pressure due to soft Consumer Price Index (CPI) and weaker Trade Balance data for November.

Australian Bureau of Statistics reported on Wednesday that inflation grew at a moderate pace of 3.4% compared to estimates of 3.7% and the October reading of 3.8%. On a month, price pressures remained flat again.

Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said in an interview with the Australian Broadcasting Corporation, earlier in the day, that “Nov CPI data was largely expected”, but inflation above 3% is too high, adding, “We wish to keep inflation between 2% and 3% over the long run.” Hauser guided on the monetary policy outlook that interest rate cuts are “unlikely anytime soon”, and the “February meeting remains live, with hike risk still priced”.

The Australian agency reported, earlier in the day, that the trade surplus narrowed to 2,936 million in November from 4,353 million in October. Australia’s Trade Balance squeezed as Exports declined by 2.9% after rising 2.8% in the previous month.

Meanwhile, the US Dollar (USD) trades firmly due to unexpectedly strong United States (US) ISM Services PMI data for December. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, revisits a four-week high near 98.86.

On Wednesday, the ISM reported that the Services PMI rose sharply to 54.4 from 52.6 in November, the highest level seen since October 2024.

Going forward, investors will focus on the US Nonfarm Payrolls (NFP) data for December, which will be released on Friday.