The Australian Dollar (AUD) is under pressure against the US Dollar (USD) as traders have raised bets supporting interest rate hikes by the Federal Reserve this year, with the AUD/USD pair posting a fresh almost eight-week low at around 0.7025.
Hawkish Fed bets have accelerated following the release of the surprisingly strong United States (US) Nonfarm Payroll (NFP) data for May
On Friday, the US NFP report showed that the economy created 172K fresh jobs, significantly higher than 85K estimates. Meanwhile, the April reading was also revised higher to 179K from 115K. The CME FedWatch tool shows that the possibility of the Fed delivering at least one interest rate hike this year has increased to 73.8% from 45.2% seen a week ago.
Hawkish Fed bets have already accelerated in the past few months as energy prices elevated due to the Middle East crisis. Before the onset of the US-Israel war with Iran, traders had anticipated two interest rate cuts by the Fed this year. For more cues on the US interest rate outlook, investors will focus on the Consumer Price Index (CPI) data for May, which will be released on Wednesday.