The Australian Dollar climbs as the RBA’s third consecutive rate hike this year contrasts with US inflation pressures ahead of PPI data.
The AUD/USD pair climbed to near 0.7240 in Asian trading, supported by the Reserve Bank of Australia’s decision to raise interest rates to 4.35% on May 5. This marks the third consecutive hike in 2024, aligning with market expectations and bolstering the Aussie’s near-term outlook.
Prior to the RBA’s move, markets had priced in the rate increase, though economists suggest the central bank may now adopt a wait-and-see approach unless further fiscal stimulus emerges. Meanwhile, US inflation data released Tuesday showed a sharper-than-expected rise, with CPI accelerating to 3.8% YoY in April from 3.3% in March, exceeding forecasts and pushing Fed rate hike probabilities higher.
Traders are now eyeing the US Producer Price Index report due later Wednesday, with expectations of a 4.9% YoY increase in headline PPI for April, up from 4.0% in March. Core PPI is projected to rise 4.3% YoY, compared to 3.8% previously.