- The Australian Dollar extended losses after weaker domestic data this week.
- The Australian Industry Index indicated prevailing contractionary conditions in private business activity.
- The US Dollar continues gains after a stronger Employment Cost Index released on Tuesday.
The Australian Dollar (AUD) remains under pressure following the release of the AiG Industry Index on Wednesday, indicating a prevailing contraction in private business activity in Australia during March. However, with the Reserve Bank of Australia’s (RBA) meeting scheduled for next week, it is widely anticipated to maintain interest rates at the current level of 4.35%.
The Australian Dollar lost ground after lower than expected Aussie Retail Sales data released on Tuesday, potentially affecting the RBA's hawkish stance on interest rates. However, higher than expected domestic inflation data released last week has raised expectations that the central bank may delay interest rate cuts.
The US Dollar Index (DXY), which gauges the performance of the US Dollar (USD) against six major currencies, continues its rally ahead of the US Federal Reserve (Fed) policy meeting scheduled for Wednesday. US bond yields surged following higher than expected Employment Cost Index data, further bolstering the USD. Additionally, hawkish remarks from Fed officials, signaling no immediate need for rate cuts, undermined the AUD/USD pair.
Traders are expected to observe the release of the ADP Employment Change and ISM Manufacturing PMI from the United States (US) on Wednesday, ahead of the Fed's Monetary Policy Statement. These releases will likely provide further insights into the state of the United States (US) economy.
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