The Australian Dollar declines possibly due to risk aversion on Friday.
The AUD may limit its downside due to rising expectations of the RBA maintaining a hawkish stance.
Fed’s Goolsbee stated that the US economy appears to be on track to achieve 2% inflation.
The Australian Dollar (AUD) continues to retreat on Friday after reaching a six-month high of 0.6798 in the previous session. The AUD/USD pair found support as the US Dollar (USD) weakened following softer-than-expected US Consumer Price Index (CPI) data in June. This has increased expectations of a potential Federal Reserve (Fed) rate cut in September.
The AUD may limit its downside as speculation grows that the Reserve Bank of Australia (RBA) might delay the global rate-cutting cycle or even raise interest rates again. Persistently high inflation in Australia prompts the RBA to maintain a hawkish stance.
The US Dollar (USD) remains subdued amid lower US Treasury yields. Investors in the fed funds futures market have increased their bets on a rate cut by the US Federal Reserve starting in September. According to CME Group’s FedWatch Tool, markets are now pricing in nearly 89% odds of a rate cut at the September Fed meeting, up from 73% on Wednesday.
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