The Australian dollar has continued its upward trend, marking a fourth consecutive week of gains. The currency rose 0.89 per cent to US70.73¢, reaching a new 3½-year peak of US71.47¢. This surge was fuelled by hawkish remarks from Reserve Bank of Australia (RBA) deputy governor Andrew Hauser, who indicated that inflation remains persistently high and further policy tightening may be necessary.
Precious metals prices also played a supportive role, with gold prices holding steady near $US5000 an ounce and silver around $US78. The weaker US dollar, influenced by softer-than-anticipated US inflation data, further contributed to the Australian dollar’s strength. Headline CPI came in at 2.4 per cent year-on-year, while core CPI registered 2.5 per cent, bolstering expectations of potential rate cuts by the Federal Reserve.
IG market analyst Tony Sycamore pointed out that upcoming economic data, including Thursday’s Australian labour force report, US fourth-quarter GDP, flash PMIs, and broader risk sentiment, will be pivotal in shaping market direction this week. These events will occur amidst thinner trading volumes due to the US Presidents’ Day holiday and Lunar New Year closures in parts of Asia. The labour force update is anticipated to show an increase of 20,000 jobs, with the unemployment rate rising slightly to 4.2 per cent.
Sycamore added that a stronger-than-expected jobs report could lead the market to anticipate an earlier RBA rate hike. Currently, the market has priced in approximately a 75 per cent chance of a rate hike in June, but a robust jobs print could shift this expectation to May.
