The Australian Dollar weakens against the USD amid Fed rate hike expectations and geopolitical tensions, trading near 0.7040.
The AUD/USD pair remains under pressure, trading near 0.7040 during the Asian session, failing to sustain a modest rebound from its lowest level since April 13. The US Dollar’s strength, driven by hawkish Federal Reserve expectations, continues to weigh on the pair.
Traders are pricing in over a 70% chance of a Fed rate hike by year-end, while odds for a Reserve Bank of Australia (RBA) June hike have diminished. Geopolitical risks, including US-Iran tensions, also support the USD’s safe-haven appeal, limiting the AUD’s upside.
Key US inflation data, including May’s CPI and PPI reports, will be closely watched this week for further clues on the Fed’s policy trajectory.