Aussie Weakens Ahead of Crucial Inflation Data
Traders are increasingly betting on an interest rate hike by the Federal Reserve next week, following stronger US jobs data. According to the CME FedWatch Tool, there's a 60% chance of a rate hike at the central bank's policy meeting.
The upcoming Producer Price Index (PPI) and Consumer Price Index (CPI) inflation reports could provide more clues about the monetary policy outlook ahead of the Fed's meeting. A hot CPI print would likely seal a September hike, while a cooler reading would strengthen the case for a hold.
RBA Assistant Governor Sarah Hunter said that the central bank may need to raise interest rates again if inflation proves more persistent than expected. This hawkish signal could provide support to the Aussie. Analysts at Rabobank note that the RBA has turned more overtly hawkish, which aligns with US policy preferences and supports a firmer near-term outlook for the AUD.