AUD/USD Range-Bound Ahead of Fed and RBA Rate Hike Expectations

The AUD/USD pair is trading near 0.7160 as market expectations of interest rate hikes from both the Federal Reserve and the Reserve Bank of Australia (RBA) keep it range-bound.

The US Dollar has remained resilient despite softer-than-expected US economic data, including a slower August ISM Manufacturing PMI reading at 54.6, which missed forecasts of 55.2.

Despite this, the US Dollar Index climbed around 0.23% to 99.64, reflecting continued expectations that the Federal Reserve could raise interest rates in September, with markets pricing a roughly 66% probability of a 25-basis-point hike at the September 15-16 meeting.

The Australian Dollar is supported by expectations of further RBA tightening, as Australian inflation has remained sticky, and hotter-than-expected July CPI data have strengthened the case for another potential hike.