Aussie and Kiwi Dollars Hold Steady Ahead of US CPI Data

The Australian and New Zealand dollars have been relatively stable as investors await the upcoming US inflation reading. This phenomenon is not uncommon, as currencies often 'mark time' before significant data releases can quickly shift investor expectations of interest rates.

Reuters notes that the core consumer price index (CPI) in the US holds particular significance, as a hotter-than-expected reading could lead to increased odds of a Federal Reserve rate hike and support for the US dollar. Conversely, a cooler reading would likely do the opposite.

The Australian dollar has been maintained near $0.7062 due in part to the Reserve Bank of Australia (RBA) holding its policy rate at 4.35%. Governor Michele Bullock stated that it is 'quite possible' the bank may need to raise rates again if inflation doesn't fall as expected.