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All Eyes Are on the RBA Rate Decision as the AUD/USD Edged Higher above 0.6600
Despite the weaker US Dollar on Tuesday, the AUD/USD remains positive at approximately 0.6615. It is anticipated that the Reserve Bank of Australia (RBA) will maintain rates at 4.35% during its June meeting on Tuesday. In the near term, the pair's upside potential may be limited by the hawkish voices of Federal Reserve officials.
During the early Asian session on Tuesday, the AUD/USD pair broke its three-day losing trend near 0.6615. The pair receives some support from the weaker US Dollar (USD). The Reserve Bank of Australia (RBA) interest rate decision and Governor Michele Bullock's press conference will be attentively monitored by investors.
The RBA is expected to maintain the Official Cash Rate (OCR) at 4.35% for the fifth consecutive meeting in June. The expectation that the Reserve Bank of Australia (RBA) might postpone the interest rate reduction was prompted by the persistently high inflation in Australia. A hawkish message from the Reserve Bank of Australia (RBA) following the policy meeting could potentially boost the Australian Dollar (AUD) and generate a tailwind for the pair. Nevertheless, the Australian dollar may be attractive to some sellers if the hawkish expectations are not met.
ANZ bank analysts postponed their prediction of an interest rate cut until next year, anticipating that the Australian central bank would delay the cash rate reduction until February of the following year in response to inflation data that exceeded expectations over the past two months. Adam Boyton, the director of Australian economics at ANZ, also expressed his skepticism regarding the RBA's ability to maintain inflation within the range by the November meeting, citing the stronger-than-anticipated Q1 CPI.
In the post-meeting press conference, US Federal Reserve (Fed) Chairman Jerome Powell reiterated a data-dependent approach and refrained from alluding at a specific timeline for rate cuts in the USD. Loretta Mester, President of the Cleveland Fed Bank, and Austan Goolsebee, President of the Chicago Fed Bank, underscored the necessity of increased confidence and declared that they would await the data. However, Minneapolis Fed President Neel Kashkari stated on Sunday that it is a "reasonable prediction" that the Fed will reduce interest rates once this year, delaying the action until December. In the near term, the pair's upside potential may be limited by the hawkish posture of Fed officials, which continues to support the Greenback.
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