Australian Dollar Weakens as Middle East Peace Eases
The Australian dollar (AUD) continued its gains for the third straight session on Wednesday (25/06). The AUD/USD pair remained firm following the release of Australia’s monthly Consumer Price Index (CPI), which rose by 2.1% year-on-year in May. Inflation came in lower than market expectations of 2.3% and the previous 2.4%, easing after remaining consistent for three consecutive months.
The softer Australian inflation data, coupled with the recent weaker-than-expected GDP figures, strengthened expectations for a Reserve Bank of Australia (RBA) interest rate cut in July. Markets are now pricing in an 80% probability of a 25 basis points (bps) interest rate cut by the RBA next month. Traders are also expecting a total of 73 bps of interest rate cuts by the end of the year.
The AUD is also receiving support from improved risk appetite amid easing tensions in the Middle East. US President Donald Trump announced that a ceasefire between Iran and Israel has come into effect, raising hopes for an end to the 12-day conflict. However, caution remains amid uncertainty over the sustainability of the truce. Traders are likely to focus on a potential revival of nuclear talks and the fate of Iran's enriched uranium.
Source: FXStreet