The Australian dollar eased to around $0.71 but remained close to a one-week high, as renewed US strikes on Iran undermined hopes for a peace agreement and tempered risk sentiment. Investors also stayed cautious ahead of key domestic inflation data.
April CPI, due Wednesday, is expected to show consumer prices rising 0.6% month-on-month, with annual inflation edging down to 4.4% from 4.6%, largely reflecting a government fuel tax reduction. However, the Reserve Bank of Australia’s preferred core gauge, the trimmed mean, is forecast to quicken to 3.4% year-on-year from 3.3%, driven by higher transport and logistics costs across a wide range of sectors.
A stronger-than-expected inflation print could bolster the case for additional monetary tightening, though markets currently price only a 10%–12% probability of a 25-basis-point rate increase in June, while the likelihood of an August hike is seen at around 50%.
In commodities, oil prices moved higher after reports of new military strikes in Iran dimmed the chances of an interim agreement between Tehran and Washington to reopen the Strait of Hormuz.
The material has been provided by InstaForex Company – www.instaforex.com
SOURCE LINK : Aussie Edges Lower as CPI Looms
