AUD/USD Seeks May High as US CPI Report Looms
The Australian Dollar (AUD) is eyeing its May high as traders prepare for the upcoming US Consumer Price Index (CPI) report, which could have a significant impact on expectations for a September Federal Reserve hike.
This week's inflation data will be closely watched after last month's strong Nonfarm Payrolls report led to a repricing of Fed rate hike probabilities. The latest figures show that Fed funds futures are now above 60% probability of a 25 basis point hike in two weeks, following the addition of 162k jobs compared to the expected 53k.
The CPI report on Friday will be the final major US inflation reading before the Federal Reserve's September meeting. Policymakers were divided at the last meeting, and this data will help shape expectations for the policy path. The European Central Bank (ECB) rate decision is also due out this week, with traders focused not only on the decision but also on accompanying statements.