AUD/USD stabilizes near 0.6600 albeit uncertainty ahead of US CPI and Fed’s decision
|- AUD/USD holds ground slightly below 0.6600 while the outlook remains uncertain.
- The Fed is expected to hold interest rates steady for the seventh straight time.
- The Australian Dollar will dance to the tunes of the Employment data.
The AUD/USD pair gains ground slightly below the round-level resistance of 0.6600 in Tuesday’s New York session. The Aussie asset finds cushion even though the US Dollar (USD) remains firm amid cautious market mood ahead of the United States (US) Consumer Price Index (CPI) data for May and the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.
The S&P 500 opens on a bearish note amid expectations that the Fed will keep interest rates steady in the range of 5.25%- 5.50%. 10-year US Treasury yields have edged down to 4.44% but hold their strong recovery from 4.27%. The US Dollar Index (DXY) extends its upside to the monthly high near 105.45.
Investors see the Fed holding interest rates at their current levels for the seventh time in a row as the battle against stubborn inflation continues. Fed officials will not consider rate cuts until they are convinced that inflation will sustainably return to the desired rate of 2%.
Investors will pay close attention to the US CPI data for May to determine the current status of inflation. Annual core inflation, which excludes food and energy prices, is estimated to have decelerated to 3.5% from the prior release of 3.6%, with the headline figure rising steadily by 3.4%.
Meanwhile, the Australian Dollar will dance to the tunes of the Employment data for May, which will be published on Thursday. The Australian laborforce is expected to have expanded by 27.5K fresh payrolls. In April, Australian employers hired 38.5K new workers. The Unemployment Rate is estimated to have declined to 4.0% from 4.1% in April. The employment data will influence market speculation for Reserve Bank of Australia (RBA) rate cuts.
Currently, investors expect that the RBA will not reduce interest rates this year. Market expectations for the RBA, keeping interest rates restrictive for the entire year, strengthened after commentary from RBA Governor Michele Bullock indicated that the central bank is prepared to increase interest rates further if inflation does not return to the target range of 1%- 3%.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.