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The Australian dollar’s decline may be due to investors’ caution about the upcoming inflation data.
Australia’s Westpac Consumer Confidence Index rose 1.7% month-on-month in June, the highest level since February.
Strong US business activity data dampened expectations of a rate cut by the Federal Reserve and may limit the dollar’s downside.
On Tuesday, the Australian dollar (AUD) fell despite the release of an improvement in the Westpac Consumer Confidence Index in Australia today. The decline may be due to investors’ caution ahead of the release of Australian inflation data this week. However, the AUD/USD pair may have limited room to fall as the Reserve Bank of Australia maintains a hawkish stance.
According to ABC News, Reserve Bank Governor Bullock said in a recent press conference that the board discussed potential rate hike options and denied considering a rate cut in the near term. Market expectations for the Reserve Bank of Australia to cut interest rates this year have been greatly reduced, and monetary policy easing is not expected until April next year.
The US dollar exchange rate weakened ahead of key US economic data to be released later this week. Revised first-quarter U.S. gross domestic product (GDP) will be released on Thursday, followed by the core PCE price index on Friday.
