- The Australian Dollar advances further due to improved risk sentiment.
- The RBA concentrates on the potential upside risks to inflation and does not anticipate any rate cuts soon.
- The US Dollar loses ground due to dovish comments from Fed officials.
The Australian Dollar (AUD) continues its winning streak for the third consecutive day against the US Dollar (USD) on Monday. The upside of the AUD/USD pair could be attributed to improved risk sentiment, along with the hawkish mood surrounding the Reserve Bank of Australia (RBA) regarding its policy outlook. Investors will be closely watching the RBA Meeting Minutes and the People’s Bank of China’s (PBoC) Interest Rate Decision on Tuesday.
RBA Governor Michele Bullock stated on Friday that the Australian central bank is focused on the potential upside risks to inflation and anticipates no rate cuts in the near term. Bullock emphasized that the RBA board believes it has struck the right balance between controlling inflation and maintaining stability in the current economic climate, according to ABC News.
The US Dollar (USD) receives downward pressure as the likelihood of an interest rate cut by the Federal Reserve (Fed) starting in September increases. Last week's US economic data showed Retail Sales exceeding expectations, while both the Producer Price Index (PPI) and Consumer Price Index (CPI) indicated that inflation is easing. Additionally, Housing Starts in July fell to their lowest level since 2020. This week, all eyes will be on Federal Reserve Chair Jerome Powell's upcoming speech.
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