Australian Dollar extends losses due to rising odds of an RBA rate cut, US NFP awaited

• The Australian Dollar declines as the ANZ now forecasts a 25 basis points rate cut by the RBA in February.
• China’s latest inflation data, which underscored rising deflationary risks, offered no support to the AUD.
• The US Nonfarm Payrolls is expected to decrease to 160K in December, down from the previous 227K.

The Australian Dollar (AUD) extends its losses for the fourth consecutive day against the US Dollar (USD), with the AUD/USD pair hovering near two-year lows on Friday. The AUD receives downward pressure as the ANZ is now forecasting a 25 basis points (bps) rate cut by the Reserve Bank of Australia (RBA) in February. Traders are now focused on US labor market data including Nonfarm Payrolls (NFP), for additional policy direction insights.

The AUD found no support from China’s latest inflation data, which highlighted increasing deflationary risks. China’s Consumer Price Index (CPI) increased by 0.1% year-over-year in December, slightly lower than the 0.2% rise in November, matching market expectations. Monthly, CPI inflation remained unchanged at 0% in December, aligning with estimates, following a 0.6% decline in November. Any change in Chinese economic conditions could impact the Australian markets as both nations are close trading partners.