Australian Dollar weakens to near 0.7150 as Fed's Warsh signals rate hikes, China's PMI data loom
The AUD/USD pair loses traction to near 0.7160 during the early Asian session on Monday.
The Australian Dollar (AUD) dropped to a near 0.7150 level on Monday, amid signals from the Federal Reserve (Fed) that interest rate hikes may be necessary if policymakers believe inflation is not returning to its 2% target. Federal Reserve Chair Kevin Warsh, in his debut speech at the Jackson Hole symposium, indicated that the central bank would have to work harder should inflation fail to cool, suggesting that further rate increases could be needed to curb price pressures.
This hawkish stance increased the probability of a 25 basis point (bps) rate hike at the Fed's September meeting to nearly 57.5%, up from 35% previously. China's Purchasing Managers Index (PMI) data, expected later that day, could provide some relief for the Australian Dollar, as China is a significant trading partner for Australia.
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