Aussie Steady, Markets Eye Energy Inflation
The Australian dollar strengthened slightly against the US dollar, with AUD/USD trading around 0.6910 during Friday's Asian session. The strengthening occurred in line with the weakening USD, despite increased risk aversion sentiment due to tensions in the Middle East. Market activity is expected to remain sluggish due to the Good Friday holiday.
From a fundamental perspective, Chinese data signaled a slowdown. The RatingDog Services Purchasing Managers' Index (PMI) fell to 52.1 in March from 56.7 in February, lower than the 53.7 expected, given that China is Australia's main trading partner.
The market also highlighted the risk of rising inflation from surging energy prices related to the Middle East conflict, which could weigh on growth prospects and boost expectations of policy tightening. As of April 1, the ASX 30-Day Interbank Cash Rate Futures contract for May 2026 indicated a 55% probability of a rate hike to 4.35% at the next RBA meeting, amid concerns about the risk of stagflation.
Geopolitical tensions remain a source of volatility. US President Donald Trump alluded to the destruction of a bridge in Tehran and warned of further action, while Iran resisted the pressure. From the US, Chicago Fed President Austan Goolsbee expressed concern that rising oil prices could complicate efforts to curb inflation, especially if rising gasoline prices also boost inflation expectations. (asd)
Source: Newsmaker.id
