Market Risk Appetite Strengthens, AUD/USD Continues to Rise

The Australian dollar (AUD) rose for a fourth consecutive session on Monday, boosted by the Reserve Bank of Australia’s hawkish outlook. This optimism has supported the strength of the Australian dollar, providing support for AUD/USD.

The Reserve Bank of Australia is widely expected to hold the cash rate steady at a 12-year high of 4.35% at its upcoming meeting on Tuesday. However, according to the Australian Financial Review, the market expects that the Reserve Bank of Australia may return to easing tightening policies, especially after last week’s higher-than-expected inflation data.

The U.S. dollar index (DXY), which measures the U.S. dollar’s performance against six major currencies, remained under pressure as U.S. employment data released last Friday fell short of expectations. The development has reignited hopes that the U.S. Federal Reserve may cut interest rates later this year. Federal Reserve Chairman Powell took a relatively dovish stance on the outlook for monetary policy at Wednesday’s meeting, and risk appetite may continue to rise this week.

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