AUD Tumbles as Fed Hikes Loom, China PMI on Deck

The Australian Dollar has slipped to near 0.7150 against the US Dollar in early Asian trading, as Federal Reserve Governor Christopher Warsh signaled possible further interest rate hikes.

This hawkish stance from Warsh reinforced market expectations that the US central bank may maintain higher interest rates for longer to combat persistent inflation, strengthening the US Dollar and putting pressure on risk-sensitive currencies like the Australian Dollar.

The CME FedWatch Tool indicates a 42% probability of a 25-basis-point rate hike at the next Federal Open Market Committee meeting, up from 35% a week earlier.