Fading US rate hike expectations and softer economic data weigh on the USD, lifting the Australian dollar to a three-day high.
AUD/USD climbed to 0.7110 in Asian trading Tuesday, extending gains for a third straight session. The rally follows a sharp decline in Fed rate hike bets after weaker-than-expected US jobs and inflation data for July reduced pressure on the central bank to tighten further.
Market pricing now shows a 35% chance of a September rate increase, down from 47% a month ago, according to the CME FedWatch Tool. The shift comes after July’s Nonfarm Payrolls missed forecasts and consumer price inflation moderated last week.
Geopolitical tensions between the US and Iran added to USD weakness, though focus in Australia shifts to upcoming Westpac Consumer Confidence data for August.