AUD Falls for 6 Days, But RBA Could Be an "Ace"
The Australian Dollar (AUD) weakened against the US Dollar (USD) on Thursday for the sixth consecutive day. However, pressure on the AUD/USD pair has the potential to ease as the market becomes more cautious after Australian consumer inflation expectations data rose to 4.7% in December from 4.5% in November. This increase signals that inflation remains stubborn and could support the hawkish stance of the Australian Reserve Bank (RBA).
Market discussions are now increasingly prevalent regarding the possibility of an earlier RBA interest rate hike, possibly as early as February. Several major banks, such as the Commonwealth Bank of Australia and National Australia Bank, predict that the RBA will begin tightening policy earlier than previously expected, as the economy is considered to have limited capacity, making it more difficult for inflation to fall.
These expectations are also reflected in the swap market: the probability of a rate hike in February is estimated at around 28%, rising to almost 41% for March, and an August rate hike is already almost fully priced in. This means that if inflation data and RBA comments remain hawkish, the AUD could receive a boost. However, if the USD remains dominant, the AUD/USD remains vulnerable to further pressure. (az)
Source: Newsmaker.id
