Ella 
During early Asian trading on Monday, the AUD/USD remained weak and was above the 0.6700 mark. The U.S. dollar’s rebound from its late-December lows pushed AUD/USD lower. Investors are awaiting fresh impetus from this week’s U.S. Consumer Price Index (CPI). This data may trigger AUD/USD volatility in the short term. AUD/USD is currently trading around 0.6712, down 0.03% on the day.
The U.S. Bureau of Labor Statistics (BLS) reported on Friday that nonfarm payrolls (NFP) increased by 216,000 in December from 173,000 previously, which was stronger than the 170,000 expected. Meanwhile, average hourly earnings rose 0.4% monthly in December and 4.1% annually. Finally, the unemployment rate was flat at 3.7%, suggesting the economy is still some way away from recession.
In response to the data, the Fed fund futures market lowered the odds of a rate cut by the Federal Reserve in March to about 56%, according to the CME FedWatch Tool. Fed officials released their interest rate forecasts at their December meeting, saying they expected a 75 basis point rate cut in 2024. In other words, the market expects the Fed to be more aggressive, with futures traders expecting the Fed to cut interest rates up to six times.
On the other hand, market participants will focus on Australia’s monthly retail sales data for November due out on Tuesday, which is expected to rise 1.2% after falling 0.2% in October. The data may convince RBA policymakers to keep interest rates high for longer.
