- AUD/USD trades in positive territory for the third consecutive day around 0.6655 on Monday.
- The US PCE index rose 0.3% MoM in April, matching the expectation.
- The Australian monthly CPI inflation triggered the speculation that the RBA might need to hike again to curb the inflationary pressure.
The AUD/USD pair extends the rally near 0.6655 during the early Asian session on Monday. The uptick of the pair is bolstered by the weaker US Dollar (USD) after the US Personal Consumption Expenditure Price Index (PCE) report showed that inflation cooled faster than expected in April. Investors will shift their attention to Australia’s Gross Domestic Product (GDP) for Q1 on Wednesday and the US Nonfarm Payrolls on Friday.
The US PCE index, the Fed’s preferred measure of underlying US inflation, rose 0.3% MoM in April, matching the expectation, the Commerce Department reported on Friday. On an annual basis, the PCE figure increases by 2.7% YoY, compared to an advance of 2.7% in March. The Core PCE, excluding the volatile food and energy, climbed 0.2% MoM in April as compared to a 0.3% gain in March. On an annual basis, the core PCE price index jumped 2.8% for the third consecutive month.
The April US PCE inflation data indicated inflation in the US remains stubbornly high as in March, raising doubt on how soon it will be able to cut interest rates. Traders were not pricing in rate cuts for the Fed’s June or July meeting, seeing a 50% odds of Fed rate cuts in September, according to the CME FedWatch tool. Fed officials emphasized that they would wait for more evidence that inflation is easing before moving to cut rates and that patience would be needed. Nonetheless, the higher-for-longer US rate narrative might support the Greenback and cap the upside for the pair in the near term.
On the other hand, the Australian Dollar (AUD) attracts some buyers as the monthly inflation rate rose to 3.6%, triggering speculation that the Reserve Bank of Australia (RBA) might need to hike interest rates again. Australia’s monthly Consumer Price Index (CPI) rose 3.6% YoY in April, beating the estimation of 3.4% and the previous reading of 3.5%.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats to 1.0700 area following post-PCE jump
After spiking to a daily high of 1.0720 with the immediate reaction to US PCE inflation data, EUR/USD lost its traction and declined to the 1.0700 area. Investors remain cautious ahead of this weekend's French election and make it difficult for the Euro to gather strength.
GBP/USD stays below 1.2650 after US inflation data
GBP/USD struggles to preserve its bullish momentum and trades below 1.2650 in the American session on Friday. Earlier in the day, the data from the US showed that the annual core PCE inflation declined to 2.6% in May, limiting the USD's upside and helping the pair hold its ground.
Gold keeps its daily gains near $2,330 following US PCE data
Gold prices maintain their constructive bias around $2,330 after US inflation readings gauged by the PCE matched consensus in May and US yields advance slightly across the curve.
BTC struggles around the $62,000 level
Bitcoin price faces pullback resistance at the lower band of the descending wedge around $62,000. Ethereum price finds support at $3,288, the 61.8% Fibonacci retracement level. Ripple price faces resistance at $0.500, its daily resistance level.
French Elections Preview: Euro to suffer after the calm, as specter of extremists, uncertainty rise Premium
The first round of French parliamentary elections is set to trigger high uncertainty. Soothing messages from the far right and far left leave the Euro vulnerable to falls. Calm may return only after the second round of voting on July 7.