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- The AUD/USD currency pair continues to rise around the 0.6675 level in the early Asian trading session on Monday.
- Core consumer price inflation in the United States rose 2.6% year-on-year in May, compared to 2.6% in April.
- Stubborn inflation in Australia has dampened expectations that the Reserve Bank of Australia will cut interest rates, strengthening the Australian dollar.
The AUD/USD pair is trading on a stronger note near 0.6675 during the early Asian session on Monday. Growing speculation that the US Federal Reserve will cut interest rates in 2024 is weighing on the dollar across the board.
Inflation in United State It fell to its lowest annual rate in more than three years. The U.S. personal consumption expenditures price index rose 2.6% year-over-year in May, compared with 2.7% in April, according to the U.S. Bureau of Economic Analysis. analysis On Friday, the figure was in line with market expectations. Core personal consumption price inflation rose 2.6% year-on-year in May from 2.8% in April, in line with estimates.
The US inflation report pointed to a slowing trend in consumer price growth in the US, raising the possibility of a rate cut by the Federal Reserve later this year. This in turn puts some selling pressure on the US dollar and acts as a headwind for the AUD/USD pair. Investors are now pricing in a 53% chance of a Fed rate cut. Rates At the September meeting, according to the CME FedWatch tool.
Regarding the Australian dollar, rising inflation in Australia has postponed expectations that the Reserve Bank of Australia will cut interest rates, which will raise the value of the Australian dollar. Last week, Reserve Bank of Australia Assistant Governor Christopher Kent said the Australian central bank was alert to risks that could arise from higher inflation and wanted to see evidence of further easing in inflation before considering cutting interest rates. The Reserve Bank of Australia is expected to postpone interest rate cuts, making it one of the last central banks in the G10 countries to adopt a policy of lowering interest rates. Delaying interest rate cuts may strengthen the Australian dollar.
