Anna 
The Australian Dollar (AUD) managed to pare its daily losses after the release of higher-than-expected Monthly Consumer Price Index (CPI) data on Wednesday. This robust economic data could prompt the Reserve Bank of Australia (RBA) to consider another interest rate hike. The minutes from the RBA’s May policy meeting had already hinted at the central bank’s contemplation of a potential rate increase.
Earlier during Asian trading hours, the Australian Dollar struggled against increased risk aversion, which was evident in the strength of the US Dollar (USD). The USD’s strength was linked to rising US Treasury yields, with the US Dollar Index (DXY) trading higher around 104.70. At the same time, 2-year and 10-year US Treasury yields stood at 4.96% and 4.54%, respectively.
The rebound of the US Dollar on Tuesday was further fueled by comments from Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, suggesting that a rate hike might still be possible. Kashkari expressed uncertainty about the disinflationary process and predicted only two rate cuts, leading to a decrease in the likelihood of a 25 basis-point rate cut by the Federal Reserve in September, according to the CME FedWatch Tool.
Looking ahead, investors will closely monitor New York Fed President John Williams’ speech on Wednesday, along with the release of the Fed’s Beige Book. The Beige Book provides an overview of the current US economic situation, offering insights from interviews with key business contacts, economists, market experts, and other sources from the 12 Federal Reserve Districts.
