Australian Dollar hits hard by risk-aversion mood, Aussie CPI data awaited

The Australian Dollar trades lower against its major peers as hawkish Fed bets prompt the risk-off mood.
The BofA expects the Fed to deliver three interest rate hikes this year.
Investors await the Australian CPI and the employment data for May.

Sagar Dua FXStreet

The Australian Dollar (AUD) underperforms its currency peers, trading 0.8% lower at around 0.6945 against the US Dollar (USD) during the European session on Tuesday. The antipodean faces intense selling pressure as market sentiment turns risk-averse due to expectations that the Federal Reserve (Fed) will deliver at least two interest rate hikes this year.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.31%	0.29%	-0.02%	0.20%	0.87%	0.54%	0.14%
EUR	-0.31%		-0.04%	-0.33%	-0.13%	0.52%	0.22%	-0.18%
GBP	-0.29%	0.04%		-0.28%	-0.07%	0.58%	0.26%	-0.13%
JPY	0.02%	0.33%	0.28%		0.21%	0.88%	0.55%	0.14%
CAD	-0.20%	0.13%	0.07%	-0.21%		0.68%	0.35%	-0.06%
AUD	-0.87%	-0.52%	-0.58%	-0.88%	-0.68%		-0.30%	-0.69%
NZD	-0.54%	-0.22%	-0.26%	-0.55%	-0.35%	0.30%		-0.42%
CHF	-0.14%	0.18%	0.13%	-0.14%	0.06%	0.69%	0.42%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

As of writing, S&P 500 futures are down 1.36% to near 7,370, reflecting a risk-off market mood. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.2% higher to near 101.20, the highest level seen in over a year.

Analysts at Bank of America (BofA) expect the Fed to deliver three interest rate hikes of 25 basis points (bps) in September, October, and December meetings, a sharp turnaround from the anticipation that the central bank will stand pat this year.

“The data simply don't warrant cuts this year. Core inflation is too high, and moving up. The solid April jobs report was the last straw, especially given hawkish Fedspeak," BofA said.

On the domestic front, investors await the Consumer Price Index (CPI) and the employment data for May, which will be released on Wednesday and Thursday, respectively. Investors will pay close attention to the inflation data, as soft figures in April led to unwinding of hawkish Reserve Bank of Australia (RBA) bets.

The Australian Bureau of Statistics is expected to show that inflationary pressures grew at a faster pace of 4.4% Year-on-Year (YoY) against the previous reading of 4.2%. On a monthly basis, the inflation data is expected to arrive at -0.3% vs. 0.4% in April.

Meanwhile, the labor market data on Thursday will likely show that the Unemployment Rate dropped to 4.4% from 4.5% in April.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a comprehensive basket of goods and services acquired by household consumers. The indicator is the primary measure of headline inflation after a new methodology was applied to transition from quarterly to monthly readings, applying to data from April 2024 onwards. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.

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