AUD/USD Steady Ahead of RBA, Check Out the Details!
The AUD/USD traded sideways around 0.7204 on Friday (May 1), holding near its latest high as markets adopted a wait-and-see approach ahead of the Reserve Bank of Australia's (RBA) monetary policy decision scheduled for Tuesday next week.
The Australian dollar remains relatively supported by expectations of further tightening. According to Reuters, most economists expect the RBA to raise interest rates by 25 basis points, bringing the policy rate to 4.35%, as inflationary pressures remain high, with Australia's annual CPI reaching 4.6% (YoY) in March, well above the central bank's target.
In addition to the interest rate decision, market participants will be closely monitoring Governor Michele Bullock's comments for clues on the next policy direction. Energy risks related to tensions in the Middle East and uncertainty in the Strait of Hormuz are considered likely to prolong inflationary pressures, thus increasing market sensitivity to the RBA's policy tone.
Meanwhile, the US dollar struggled to strengthen, although geopolitical conditions typically support safe-haven demand. The market expects the Fed to hold interest rates until the end of the year, but several officials, including Neel Kashkari, have hinted at the possibility of additional increases if a major inflation shock occurs, particularly one triggered by a surge in energy prices.
With the policy narrative still data-driven, the short-term focus shifts to today's US ISM Manufacturing PMI release to gauge economic momentum. This data has the potential to influence US interest rate expectations through yield movements and risk appetite, which could ultimately shape the direction of the AUD/USD ahead of next week's RBA decision. (srh)
Source: Newsmaker.id
