Investors await US PCE inflation figures, expected to show a three-year high, reinforcing Fed rate hike bets and supporting USD strength.
The Australian Dollar remains near two-month lows at 0.6900 against the US Dollar, consolidating losses after an eight-day decline of about 2.5%. Strong Australian employment data has failed to lift the AUD as markets focus on upcoming US inflation figures.
The US Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation gauge, is expected to show headline inflation accelerating to 4.1% in May, a three-year high, up from 3.8% in April. Core PCE is projected to rise to 3.4% year-over-year, from 3.3% previously. These figures could bolster expectations for a Fed rate hike later this year.
Markets are pricing a 30% chance of a quarter-point hike in July, up from 17% a month ago, while September odds have climbed to 65% from 40%. The USD’s strength persists amid geopolitical uncertainties, keeping risk-sensitive assets like the AUD under pressure.