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AUD/USD is steady at 0.6624; focus is on RBA decision, quiet US data and UK bank holiday.
Wall Street closed higher on optimism that the Federal Reserve could cut interest rates.
ANZ analysts expect the Reserve Bank of Australia to keep interest rates on hold and may take a hawkish stance due to inflation trends.
AUD/USD saw minimal gains as traders awaited the Reserve Bank of Australia’s monetary policy meeting. Light US economic data and a UK bank holiday are the main reasons for the “weakness” in AUD/USD prices. At press time, AUD/USD was trading at 0.6624, barely moving.
Wall Street closed higher on rising sentiment as investors believed the Federal Reserve would start cutting interest rates faster than expected. Meanwhile, AUD/USD traders will prepare for the Reserve Bank of Australia’s monetary policy rate decision on Tuesday.
The Reserve Bank of Australia is expected to keep the cash rate on hold at 4.35%, but there is speculation it could turn slightly hawkish following higher-than-expected inflation data in the first quarter of 2024. ANZ analysts commented that the Reserve Bank of Australia is expected to be hawkish in its post-meeting statement.
ANZ analysts added that the RBA board may choose a form of wording such as “”The risk that inflation will not return to target within a reasonable time has increased”, followed by “The board therefore does not rule out any possible Policy Options”.
In the United States, Federal Reserve officials also gave interviews and speeches. Richmond Fed President Thomas Barkin said high interest rates are expected to further slow the economy and help bring inflation down to the 2% target. Meanwhile, New York Fed President John Williams said a rate cut is imminent, but the timing will be based on a comprehensive review of economic data.
