AUD/USD has weakened to approximately 0.7030 during the Asian session on Friday. The US PPI inflation recorded its most significant annual increase in three and a half years. The RBA is set to announce its forthcoming interest rate decision next week, with expectations indicating no alteration in the current rate. The AUD/USD pair experiences a decline in momentum, settling at approximately 0.7030 during the Asian trading hours on Friday. The US Dollar strengthens against the Australian Dollar after US wholesale prices rose more than expected in May. The preliminary reading of the Michigan Consumer Sentiment Index for June is set to be released later today.
US producer prices rose more than anticipated in May, reaching their highest level since November 2022, according to data released by the US Bureau of Labour Statistics on Thursday. The US Producer Price Index increased by 6.5% year-over-year in May, up from 5.7% in April, exceeding the market expectation of 6.4%. Meanwhile, the PPI increased by 1.1% MoM in May, surpassing the market consensus of 0.7%. This report provided additional evidence that inflationary pressures were intensifying as the conflict in the Middle East elevated the prices of energy products. Markets are currently assigning a 43% likelihood to a quarter-point rate increase in December, a notable rise from approximately 14% just a month prior, as indicated by the CME FedWatch tool.
The Reserve Bank of Australia is set to reveal its forthcoming interest rate decision on the upcoming Tuesday. Fading expectations of additional interest rate hikes by the Australian central bank could exert downward pressure on the Australian dollar. All four of Australia’s Big Four banks anticipate that the RBA will maintain its current interest rates at the forthcoming meeting, while Westpac projects a 25-basis-point hike in August.