Australian Dollar extends decline on firm Fed interest rate hike bets
The Australian Dollar (AUD) falls further against the US Dollar (USD) on Wednesday, trading 0.1% lower at around 0.7135 during the European trading session.
On Wednesday, Australia's dollar continued its downward trend, falling 0.1% to around 0.7135 against the US dollar. The decline was fueled by growing expectations that the Federal Reserve will raise interest rates at its upcoming policy meeting. The US dollar index, which measures the dollar's value against six major currencies, rose 0.1% to near 99.75, its highest level in over two weeks.
Analysts at MUFG now anticipate that "17 basis points of Fed hikes are priced in for the 16th September FOMC meeting," indicating a market increasingly concerned about potential further rate hikes as energy costs rise. Fed Governor Michael Barr also suggested that interest rate hikes would be necessary if inflation remains elevated.
Investors will closely monitor the US ADP Employment Change data for August, expected to show an increase of 48K jobs, slightly higher than the 44K seen in July. Strong Australian Q2 GDP data has also boosted expectations for a Reserve Bank of Australia interest rate hike, with TD Securities now expecting the bank to "deliver a 25bps hike at its meeting at the end of the month."
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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