Anna 
The Australian dollar bounced back from a two-day decline, influenced by the positive wave of economic data emerging from the United States. U.S. inflation figures surpassing expectations and initial jobless claims failing to meet projections have reignited discussions regarding the Federal Reserve’s monetary policy path.
A noteworthy trend has been the increased inflation expectations of Australian consumers, a phenomenon likely influenced by surging oil prices. In the upcoming week, attention is drawn to key events, including the release of the Reserve Bank of Australia (RBA) meeting minutes and the highly anticipated employment data report.
Given Australia’s substantial role as a major exporter to China, the Australian dollar remains vulnerable to the impact of China’s subdued inflation data. The intricate economic interplay between these two nations consistently shapes the Australian dollar’s performance, and any indications of weak inflation in China may weaken the Australian dollar’s strength.
The U.S. Dollar Index (DXY) gained momentum following a series of strong U.S. economic data releases. However, the U.S. dollar (USD) experienced a marginal retreat on Friday as U.S. Treasury yields moderated after a recent surge. The market’s focus will now shift to the Michigan Consumer Confidence Index, scheduled for publication on Friday.
Investors are incorporating the possibility of a Federal Reserve interest rate hike, a noteworthy development considering that recent statements from most Fed officials have been somewhat equivocal. These statements underscore the importance of maintaining higher interest rates over an extended period, even in the absence of a definitive signal to raise rates once more.
