AUD/USD Retraces as Jobs, RBA, and Trump-Xi Come into Focus
The Australian dollar's recent rally has come to an end as stronger US inflation data and rising crude oil prices weighed on AUD/USD. The focus now shifts to Australia's final employment report before next week's Reserve Bank of Australia (RBA) decision, alongside fresh RBA commentary and the upcoming Trump-Xi summit.
RBA Governor Bullock struck a hawkish tone in her recent hearing, warning that inflation risks are materializing through various cost pressures. She emphasized that demand still needs to cool while productivity remains weak, keeping the door open for another hike. The majority of big banks and market pricing back a hike, with the 1-month OIS currently around 15bp above the cash rate.
The jobs report may matter less if Governor Bullock decides to ramp up expectations of a hike when she speaks on Tuesday. If she wants to steer markets towards a move next week, this would be an ideal opportunity.