Australian Dollar holds firm amid hawkish Fed and RBA expectations
AUD/USD trades in a narrow range on Monday as markets weigh hawkish expectations from both the Reserve Bank of Australia (RBA) and Federal Reserve (Fed). At the time of writing, the pair trades around 0.7167, with a modest pullback in the US Dollar (USD) helping cushion the downside.
The Australian dollar held steady amid expectations of hawkish remarks from both the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed). On Monday, the AUD/USD pair traded around 0.7167, supported by a slight retreat in the US Dollar (USD). Fed Chair Kevin Warsh's speech at the Jackson Hole symposium reignited expectations of a September rate hike, with traders adjusting their positions and pushing the USD to a one-week high.
The CME FedWatch Tool now indicates a 65% probability of a 25-basis-point increase at the upcoming meeting. However, the USD's momentum waned on Monday, reversing most of its gains from Friday. The US Dollar Index (DXY), which measures the dollar's value against six major currencies, slipped 0.27% on the day. Analysts at OCBC maintain that the RBA has likely completed its tightening cycle, but a stronger-than-anticipated Consumer Price Index (CPI) report and robust household spending could revive the possibility of another rate hike.
This positive sentiment could bolster the AUD in the near term. Australian traders will be monitoring key economic releases this week, including Q2 GDP data, August S&P Global PMI surveys, and the China Manufacturing PMI, all of which could impact the RBA's future policy decisions.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
