Australian dollar rises, buoyed by rising hawkish sentiment toward the RBA.

On Monday, the Australian Dollar (AUD) traded near the three-week high of 0.6560. Continuing its winning streak that began on April 22. The AUD’s upward momentum is being propelled by rising hawkish sentiment toward the Reserve Bank of Australia (RBA). Which was boosted by last week’s CPI inflation data that exceeded expectations.

Retail Sales in Australia could provide insight into consumer spending habits on Tuesday.

According to the Australian Financial Review, Warren Hogan, chief economic adviser at Judo Bank. Expects the RBA to raise cash rates three times in 2024, eventually reaching 5.1%. With an initial increase expected in August. Investors are likely to be looking forward to the March Retail Sales data. Which is set to be released on Tuesday. This data provides insight into Australia’s consumer spending patterns. Which have a big impact on inflation and GDP trends.

US Dollar has retraced its recent gains due to a likely change toward risk-on mood.

The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against six major currencies, has reversed its recent gains. Likely signaling a shift in market mood toward risk-on. However, market analysts expect the US Federal Reserve (Fed) to retain the existing interest rate range of 5.25%-5.5% in its next statement on Wednesday. Owing to concerns over rising inflation levels. According to the CME FedWatch Tool, the likelihood that the Federal Reserve’s (Fed) interest rates will remain unchanged in the June meeting has risen to 87.7%, from 81.7% the previous week.

On Friday, the annual US Core Personal Consumption Expenditures (PCE) Price Index data for March showed an increase, lending credence to market speculation that the Fed may delay any prospective rate decreases until September.

Daily Market Movers: The Australian Dollar appreciates and grows hawkish attitude surrounding the RBA.

Monday saw a significant increase in Australia’s stock market, fueled by a positive performance on Wall Street. The ASX 200 Index increased its gains on Monday, with all 11 industrial sectors showing increases, following the strong momentum on Wall Street on Friday, which was propelled by impressive earnings announcements from tech heavyweights like Microsoft and Alphabet, the parent company of Google, driving the Nasdaq increased by more than 2%.
TD Securities’ most recent modification suggested that the Reserve Bank of Australia’s (RBA) planned rate drop will be delayed until February 2025, rather than November as previously projected. This update has strengthened the Australian Dollar (AUD), which has boosted the AUDJPY pair.

US Personal Consumption Expenditures (PCE) Price Index climbed 0.3% month on month in March.

The US Personal Consumption Expenditures (PCE) Price Index climbed 0.3% month on month in March, reflecting market expectations. The annual rate edged up to 2.7%, exceeding expectations of 2.6% the US Core Price Index. The Fed’s favored inflation gauge, increased by 2.8% year on year in March 2024. Moreover Figures exceeded market expectations of 2.6%. Monthly, Core PCE climbed by 0.3%, matching February’s report and meeting market expectations.
In In the first quarter, the US Gross Domestic Product Annualized (Q1) increased slowly, falling short of market estimates. GDP growth has slowed, implying that many areas of the economy may face headwinds or slow down.
Furtgermore Australia’s Consumer Price Index (CPI) reached an all-time high of 137.40 points in the first quarter of 2024, up from 136.10 points in the fourth quarter of 2023.