Quick Bites | AUD Set to Rise

The Australian dollar appreciated past $0.675 on Monday 8 July, hitting fresh 6-month highs amid expectations that the Reserve Bank of Australia (RBA) could fall behind in the global rate-cutting cycle or even raise interest rates again following stronger than expected inflation data for May. 

Markets are currently priced for better than even chances that the RBA will hike rates at its next meeting in August, while pricing out any chance for a rate cut this year. High domestic yields also continued to attract foreign capital as investors seek protection from political uncertainties in the US and Europe that could drive up market volatility further.

Moreover, the AUD gained against the USD as soft US economic data supported a dovish outlook on Federal Reserve monetary policy. The latest jobs data suggest Fed rate cuts are expected, first in September, followed by a second cut in November.

AUD/USD over the last week: AUD rising

Source: Trading Economics