Anna 
The Australian Dollar (AUD) continued its upward trajectory on Monday, reaching a three-week high around 0.6560, propelled by increasing hawkish sentiment surrounding the Reserve Bank of Australia (RBA). Last week’s CPI inflation data, which exceeded expectations, contributed to this momentum.
Warren Hogan, chief economic adviser at Judo Bank, forecasted that the RBA could implement three cash rate hikes in 2024, potentially reaching 5.1%, with the first hike expected as early as August. Investors are eagerly anticipating the release of March Retail Sales data on Tuesday, which will offer insights into Australia’s consumer spending patterns, influencing inflation and GDP trends.
Meanwhile, the US Dollar Index (DXY), reflecting the USD’s performance against major currencies, retraced recent gains, possibly reflecting a shift towards a risk-on sentiment in the market. Despite this, market analysts project that the US Federal Reserve (Fed) will maintain the current interest rate range of 5.25%–5.5% in its upcoming announcement on Wednesday, citing concerns over elevated inflation levels. The CME FedWatch Tool indicates an 87.7% probability of the Fed keeping interest rates unchanged in the June meeting, up from 81.7% last week.
The annual US Core Personal Consumption Expenditures (PCE) Price Index data for March, released on Friday, showed an increase, supporting market speculation that the Fed may delay any potential rate cuts until September.
The ongoing dynamics between central bank policies and economic data releases are expected to shape currency market trends, particularly influencing the AUD’s performance against the USD in the coming days. Investors will closely monitor upcoming announcements and data releases for further insights into monetary policy directions and their impact on currency valuations.
