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- AUD/USD maintains positive ground around 0.6615 amid US dollar weakness on Tuesday.
- The Reserve Bank of Australia is expected to keep interest rates steady at 4.35% at its June meeting on Tuesday.
- The hawkish tones of Fed officials may limit the pair’s upside in the near term.
the Australian Dollar/US Dollar The pair snapped a three-day losing streak near 0.6615 on Tuesday during the early Asian session. A weaker US dollar provides some support to the pair. Investors will be closely watching the Reserve Bank of Australia’s (RBA) interest rate decision and Governor Michelle Bullock’s press conference.
the RBA The official cash rate (OCR) is likely to remain unchanged at 4.35% for the fifth consecutive meeting in June. Australia’s stubbornly high inflation has fueled expectations that… RBA It may delay the interest rate cut. If the RBA sends a hawkish message after the policy meeting, it could lift the Australian dollar (AUD) and create tailwinds for the pair. However, failure to confirm the hawkish outlook may attract some sellers to the Australian dollar.
Last week, ANZ Bank analysts backed down their rate cut expectations until next year, predicting that Australia’s central bank will not cut the cash rate until next February due to hotter-than-expected inflation data in the past two months. “The stronger-than-expected first quarter CPI also makes it difficult to see that the RBA is confident enough that inflation will return to and remain within its range by the time of the November meeting,” said Adam Boyton, head of Australian economics at ANZ.
On the US dollar front, US Federal Reserve Chairman Jerome Powell refrained from hinting at a specific timetable for cutting interest rates and reiterated a data-driven approach in the post-meeting press conference. Cleveland Fed President Loretta Mester and Chicago Fed President Austin Golsbee stressed the need for more confidence and said they would wait for the data. However, Minneapolis Fed President Neel Kashkari said on Sunday that it was a “reasonable prediction” that the Fed would cut interest rates once this year, and wait until December to do so. The hawkish stance of Federal Reserve officials continues to support the dollar and may limit the pair’s upside in the near term.
