Australian Dollar Hits 2-Month Low, Energy Shock Risk Pressures AUD
The Australian dollar weakened to around US$0.687 on Friday, hitting a two-month low as market concerns grew that energy shocks from the Middle East war could persist for a longer period and weigh on global growth prospects. Sentiment toward commodities also weakened, while support from Australia's interest rate spread began to fade as markets increasingly priced in further tightening in other major economies, narrowing Australia's yield advantage.
Domestically, surging gasoline prices are expected to push up inflation and erode household spending. Some economists warn that headline inflation could rise to nearly 4.5% in the near term and could even approach 5% in the second quarter if energy costs remain high. The Reserve Bank of Australia (RBA) previously assessed that the prolonged Gulf conflict could pressure growth, although the central bank remains focused on preventing inflation expectations from becoming entrenched. The market is now pricing in a 68% chance of a rate hike in May and sees rates reaching 4.75% by the end of the year.
Source: Newsmaker.id
