United States Dollar Index remains stronger as hawkish Fed signals drive rate hike bets
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, inched lower after opening at a bullish gap, remaining in the positive territory and trading around 101.10 during European hours on Monday.
The Australian Dollar (AUD) weakened to near 0.7000 against its US counterpart (USD) as hawkish signals from the Federal Reserve (Fed) boosted the greenback. The RBA is expected to hike interest rates by 25 basis points to 4.60% during its meeting later on Tuesday, signaling a potential end to near-year highs. Fed officials have been cautious about persistently high inflation, which could force the central bank to maintain higher rates for longer.
The odds of a Fed October rate hike have risen to nearly 65.9%, up from 57.6% a week earlier. Meanwhile, the RBA will monitor inflation closely, with Governor Michele Bullock likely to provide insights in her press conference after the rate decision. The Australian economy remains influenced by commodity prices, particularly iron ore, and the health of China’s economy, its largest trading partner.
The RBA’s monetary policy decisions will be crucial in determining the AUD's direction, given the strong link between interest rates and the value of the Australian Dollar.
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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