- AUD/USD finds cushion near 0.6650 after soft US PPI report for May boosts Fed rate-cut hopes for September.
- The Fed’s dot plot signaled only one rate cut this year.
- Australian Employment data for May beats estimates.
The AUD/USD pair finds support near 0.6650 in Thursday’s New York session. The Aussie asset bounces back as cooling United States consumer and producer inflation has prompted expectations of the Federal Reserve (Fed) to begin reducing interest rates from the September meeting.
The US PPI report for May showed that the monthly headline PPI contracted by 0.2% as gasoline prices slumped and the core reading was stagnant. Also, annual headline and core PPI decelerated to 2.2% and 2.3%, respectively, from their expectations.
The CME FedWatch tool shows that 30-day Fed Funds futures have priced in a 67.7% chance for rate cuts in September, up from 64.7% recorded on Wednesday. The tool also indicates that there will be two rate cuts this year against one projected in the Fed’s dot plot.
On Wednesday, the Fed’s dot plot showed that policymakers have scaled back projections for several rate cuts, one from their anticipated when they last met in March. Fed Chair Jerome Powell welcomed the soft inflation report but clarified that policymakers need more soft CPI reports to gain confidence that inflation is on course to return to the 2% target.
Meanwhile, market sentiment is positive regarding firm speculation about Fed rate cuts. The S&P 500 has opened slightly bullish. 10-year US Treasury yields have declined to 4.28%.
In Australia, stronger-than-expected Employment data for May has improved speculation that the Reserve Bank of Australia (RBA) will keep its Official Cash Rate (OCR) at its current levels for the entire year. In May, Australian employers hired 39.7K job-seekers, beating estimates of 30K and the prior release of 37.4K, downwardly revised from 38.5k. The Unemployment Rate declined to 4.0%, as expected, from 4.1% in April.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: No respite to the selling pressure
AUD/USD remained well on the defensive, trading in a volatile fashion that saw spot surpass the 0.6100 hurdle just to fade that uptick afterwards and revisit the 0.5980 towards the end of the NA session.
EUR/USD: Tariffs keep the sentiment subdued
EUR/USD added to Friday’s pullback and revisited the sub-1.0900 area, or two-day lows on the back of further gains in the US Dollar and the widespread demand for the safe-haven universe.
Gold recedes to four-week lows near $2,950
The persistent selling pressure is now dragging Gold prices to the area of fresh multi-week troughs near the $2,950 mark per troy ounce, always amid the continuation of the recovery in the US Dollar, highr US yields across the curve and unabated tariff tensions.
Binance founder CZ becomes strategic advisor to Pakistan's Crypto Council
The Pakistan Crypto Council appointed Binance founder and former CEO Changpeng Zhao (CZ) as a strategic advisor on Monday to provide guidance on crypto infrastructure, education and adoption for the Pakistani government and private companies.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.