SYDNEY: The Australian dollar hovered near a four-month peak on Monday as traders eyed two upcoming central bank appearances and U.S. inflation data that could decide if the Antipodean currency's upward trend has further to run.
The Aussie was steady at $0.7202, having gained 0.6% last week to resume its upward trend from a low of $0.6867 in June. It is facing some resistance at Friday's high of $0.7214, but the next major test lies at the 2026 high of $0.7277.
The kiwi dollar had less luck, last down 0.2% at $0.5871, after falling 0.6% last week to fade away from a recent top of $0.5988. A surprisingly dovish Reserve Bank of New Zealand is largely to blame, with markets now pricing in an 80% chance for a policy pause next month after two rate hikes this year.
In contrast, markets are wagering on a 67% probability that the Reserve Bank of Australia could raise interest rates for a fourth time in 2026 to 4.6% this month. That diverging rate outlook kept the Aussie elevated near a 13-year high at NZ$1.2268.
RBA Deputy Governor Andrew Hauser will be interviewed by the ABC on Tuesday evening, while Assistant Governor Sarah Hunter will be speaking at a property event in Sydney on Tuesday afternoon.
Analysts at the Commonwealth Bank of Australia say the Aussie could remain near 72 cents for most of this week especially if Hauser or Hunter sound hawkish, but a strong U.S. inflation report could see it ease back near $0.7150.
"Attention will be on whether the stronger-than-expected Australian July CPI is viewed as evidence that upside inflation risks are materialising and strengthening the case for another interest rate hike," said Kristina Clifton, a senior economist at CBA.
Australia's 3-year government bond yields climbed 2 basis points to 4.77%, reflecting the climb in oil prices after the U.S. and Iran attacked ships in the Gulf. They were just a touch below a five-year high of 4.832%.
Across the Tasman Sea, RBNZ Assistant Governor Karen Silk will give a speech about the repo market on Wednesday. Two-year swap rates were steady at 3.6901%, having come off a high of 3.7798% hit last week. - Reuters
