Aussie Weakens Dragged Down by Strengthening US Dollar
The Australian dollar weakened again in the latest trading on Tuesday (June 23rd), moving below US$0.69. This weakening brought the Aussie to its lowest level in eleven weeks, as the US dollar continued to strengthen. Pressure on the Australian currency also increased as market participants exercised caution ahead of the release of domestic inflation and employment data this week.
Australian inflation data is a key focus as it could provide clues as to whether the Reserve Bank of Australia (RBA) is finished raising interest rates or whether it needs to continue its tighter policy. Headline inflation in May is expected to rise to 4.4% from 4.2% in the previous month. Meanwhile, core inflation is expected to edge up to 3.5% from 3.4%, indicating price pressures remain well above the central bank's target.
In addition to inflation, the market is also awaiting Australian employment data. The number of new jobs in May is expected to increase by around 25,000, while the unemployment rate is projected to fall to 4.4% after previously reaching 4.5%, its highest level in four and a half years. Following the release of inflation data, RBA Deputy Governor Andrew Hauser is scheduled to provide his views on the inflation outlook, so his remarks could potentially influence the Aussie's future direction.
On the other hand, pressure on the Australian dollar also comes from the strengthening US dollar. The greenback continues to receive support as markets expect the Federal Reserve, or The Fed, to still have the potential to raise interest rates this year, after several central bank officials struck a hawkish tone. However, the Aussie's weakness was somewhat tempered by early signs of progress in peace negotiations between the United States and Iran, which helped maintain appetite for riskier assets. (asd)
Source: Newsmaker.id
