Last week, the Australian Dollar experienced fluctuations, initially reaching 0.6821 before declining below 0.67c and closing out the week at 0.6624.
This drop came as the U.S. Dollar strengthened due to impressive GDP figures for the largest global economy. The U.S. economy demonstrated surprising growth, expanding by 2.4% year on year until the end of the second quarter, far surpassing the expected 1.8% growth.
The Federal Reserve, in its recent statement, emphasised that future rate decisions will depend on incoming data. They raised their target rate by 25 basis points.
Given the tight labour market and a strong economy, the interest rate markets are now contemplating the possibility of a more stringent U.S. monetary policy.
In contrast, the Reserve Bank of Australia (RBA) is now expected to delay potential rate hikes following a lukewarm inflation report last Wednesday. The headline CPI for the June quarter-on-quarter stood at 0.8%, falling short of the anticipated 1.0% and the previous 1.4%.
The RBA's preferred trimmed-mean CPI measure was 5.9% year-on-year until the end of June, slightly lower than the estimates of 6.0% and the prior 6.6%.
The trimmed mean quarter-on-quarter CPI reading of 1.0% was below the forecasted 1.1% and the 1.2% seen in the first quarter.
The market remains uncertain about whether the RBA will raise rates this Tuesday, but the prevailing sentiment leans towards rates remaining unchanged.
Where does this leave rates, well still in this range that we have been stuck in since February this year, sitting between 0.6580 - 0.6780 with a few fluctuations outside of this, however always being drawn back in for now.
As we head towards the bottom of this range, bringing money back into Australia from the US is the best option for now, and if you can hold off sending it out, that would be ideal.
To discuss any options please feel free to reach out.