AUD Slumps to Monthly Low on Strong US Data and Hawkish Fed Odds

The Australian Dollar has slipped to a new monthly low in the 0.7100s, driven by strong US economic data that's increasing the likelihood of a Federal Reserve rate hike later this week.

After last Friday's firm Producer Price Index and Consumer Price Index readings, markets are now pricing in a 90% chance of a rate hike, up from around 60% just a week ago. Higher oil prices, which often benefit commodity currencies, are being offset by the strong US data.

Risk appetite has soured, with US stock index futures pointing sharply lower on renewed worries about AI-related names. Soft Chinese lending data hasn't helped sentiment toward China-linked currencies either.