The AUD/USD pair started the new week on a positive note, trading near 0.6535. The US Personal Consumption Expenditures (PCE) Price Index rose by 2.7% YoY in March, surpassing market expectations of 2.6%. The strong Australian inflation data has led the Reserve Bank of Australia (RBA) to postpone any interest rate cuts this year.
The AUD/USD pair has been trading in the green for six consecutive days, supported by the RBA’s hawkish stance following the release of CPI inflation data. This week, all eyes will be on the Federal Reserve’s interest rate decision and US Nonfarm Payrolls (NFP).
US inflation increased moderately in March, prompting the Fed to maintain higher interest rates for longer. The PCE Price Index rose to 2.7% YoY in March, above the expected 2.6%. The Core PCE Price Index, excluding volatile food and energy prices, remained strong at 2.8% YoY in March.
The US central bank is expected to keep rates steady between 5.25%–5.50% on Wednesday, with the first rate cut anticipated in September. On the Australian front, traders believe the RBA may raise its cash rate before considering any cuts. The stronger-than-expected Australian inflation data last week eliminated the possibility of a rate cut, with only a 19% chance priced in for the RBA’s December meeting.
The RBA’s hawkish stance has boosted the Australian Dollar (AUD) and provided support for the AUD/USD pair.