AUDUSD Exchange Rate Waits for Governor Bullock Speech
By Martin Lam
Current Market Overview
The Australian dollar (AUD) is currently trading near recent highs as market participants await a speech from the Reserve Bank of Australia's (RBA) Governor, Philip Bullock. The AUDUSD exchange rate is at a critical juncture, with significant resistance levels identified around the 0.6950 mark, which corresponds to the highs observed in September 2024 and resistance levels dating back to February 2025.
Recent Monetary Policy Changes
Earlier this month, the RBA raised the cash rate to 3.85%, marking its first increase in over two years. This decision was made unanimously by the Monetary Policy Board, which cited rising inflation as a primary concern. Inflation has surged since mid-2025 and is expected to remain above the RBA's target range of 2-3% for an extended period. Contributing factors include stronger-than-anticipated household spending, investment, and housing activity.
Upcoming Speech and Economic Implications
Governor Bullock is scheduled to speak at approximately 3:40 PM HKT on Wednesday. He has previously indicated that while rising interest rates may cause difficulties for borrowers, failing to control inflation could lead to more severe long-term consequences. However, some analysts, including a major bank, have criticized the RBA's inflation forecasts, suggesting that Bullock has been misleading regarding the economic situation.
Inflation Insights
Goldman Sachs has reported that the increase in prices for "administered" goods and services has been a significant driver of inflation in the first half of 2025, with year-over-year growth reaching 7.6% by the end of the year. When excluding these administered prices, inflation was only 2.8%. The slower growth of Australian wages compared to inflation has raised concerns about consumer purchasing power, which is a critical consideration for the RBA in future rate decisions.
US Economic Context
On the US side, economic growth slowed to an annual rate of 1.4% in the last quarter of the year, down from 4.4% in the previous quarter. This decline has introduced uncertainty regarding future growth, particularly following the Supreme Court's reversal of the Trump tariffs, which were a significant aspect of his economic strategy. Despite this, some economists, like Michael Pearce from Oxford Economics, maintain that the core of the US economy remains resilient, with expectations for growth to rebound, albeit with potential headwinds from a slowdown in AI-related investments.