AUD Weakens Below 0.7150 Ahead of Fed Rate Decision

The Australian Dollar has weakened below 0.7150 as markets anticipate a US Federal Reserve rate decision on Wednesday, according to analysts at TMGM.

A nearly 92% chance exists that the Fed will raise interest rates by 25 basis points, implying a modest boost in the dollar if they do, said Carol Kong, currency strategist at Commonwealth Bank of Australia. However, hawkish remarks from policymakers could lift the USD against the AUD, while dovish comments might weigh on the Greenback.

The Reserve Bank of Australia has kept its Official Cash Rate at 4.35%, but expectations are growing for further rate increases due to high underlying inflation. Markets are pricing in a nearly 78% probability that the RBA will raise rates to 4.60% at their next meeting, according to RBA Rate Tracker.