Australian dollar gains momentum amid rising geopolitical tensions in the Middle East.
The Australian Dollar (AUD) recovered on Monday from its eight-week low of 0.6456 set last Friday. However, the AUDUSD pair faced challenges as traders sought safety in the US Dollar (USD) amid rising Middle East tensions.
The Aussie may encounter hurdles as the ASX 200 Index falls.
The Australian dollar may face additional hurdles as the ASX 200 Index fell, indicating investor fears over Israel’s potential retaliatory response to Iran’s attack on Saturday. Iran deployed explosives.
According to Reuters, drones and missiles are targeting Israeli military positions, with Israel intercepting nearly all incoming projectiles.
The US dollar gains support as traders express anxiety over Israel’s probable reaction to Iran’s attack.
Despite bullish opinion toward the Federal Reserve’s (Fed) monetary policy outlook, the US Dollar Index (DXY) edged down. Strong US inflation and strong macroeconomic signs are prompting the Fed to reconsider monetary easing. Market players are likely to closely monitor the US Retail Sales numbers, which will be revealed on Monday, as well as Fedspeak.
Daily Market Movers: Australian Dollar rises on hawkish mood surrounding the Fed.
Australia’s Consumer Inflation Expectations, released on Thursday, indicated a 4.6% increase in April, up from 4.3% the previous month.
Australian labour market data is due. on Thursday, including the seasonally adjusted employment change and unemployment rate for March.
As expected, the People’s Bank of China (PBoC) kept the one-year medium-term lending facility (MLF) interest rate at 2.5%. The PBoC infused 100 billion Yuan through a one-year MLF program, leaving a net drain of 70 billion Yuan.
China’s Gross Domestic Product (GDP) and Industrial Production numbers are set to be revealed on Tuesday.
Susan Collins, President of the Boston Federal Reserve (Fed), announced on Friday that she expects ‘about two’ rate decreases in 2024, with inflationary pressures to lessen later in the year. She highlighted that, while a rate increase is not currently included in the baseline scenario, it cannot be fully ruled out.
Based on the CME FedWatch Tool, the likelihood The probability of interest rates being steady at the June meeting has grown to 63.5%, up from 46.8% the previous week.
In April, the US Michigan Consumer Sentiment Index fell to 77.9 from 79.4 the previous month, below the market forecast of 79.0.
On Friday, the Core US Producer Price Index (PPI) report revealed a 2.4% year-over-year increase in March. The market expected a jump to 2.3% from 2.1% previously.
