Strong Signal from RBA Surprises Market
The Australian Dollar (AUD) strengthened slightly against the US Dollar (USD) on Tuesday, approaching a 14-month high of 0.6727. This strengthening occurred despite relatively low trading volume due to the New Year holiday in Australia. Positive sentiment stemmed from growing market expectations that the Reserve Bank of Australia (RBA) remains open to interest rate hikes.
The minutes of the RBA's December meeting indicated uncertainty among policymakers regarding whether the current monetary policy is tight enough. The RBA emphasized its readiness to tighten policy if inflation does not fall as expected. Market attention now turns to the fourth-quarter inflation data, which will be released on January 28th, as higher-than-expected core inflation figures could prompt an interest rate hike at the RBA's February 3rd meeting.
Externally, the AUD/USD pair also received support from the potential weakening of the US Dollar. Markets expect the Federal Reserve to cut interest rates two more times in 2026. Investors now await the release of the December FOMC Meeting Minutes, which are expected to provide clues about the Fed's policy direction and the dollar's future movements. (az)
Source: Newsmaker.id
