FX.co ★ Aussie Dollar Steady Ahead of CPI Data

The Australian dollar held steady around $0.706 on Tuesday, hovering near three-year highs as investors awaited key inflation data expected to reinforce a hawkish monetary policy outlook. January’s consumer price index, due Wednesday, is forecast to show annual inflation easing only marginally to 3.7% from 3.8%, while core inflation is projected to remain at 3.3% for a fifth consecutive month—above the Reserve Bank of Australia’s 2–3% target range.

A 0.9% rise in prices in the December quarter prompted the most recent rate hike, and a similar outcome for the March quarter would likely intensify pressure for another move in May. Futures markets are currently pricing in about a 70% chance of a 25-basis-point increase to 3.85% in May, with an additional hike in June almost fully anticipated.

Investors will also closely watch RBA Governor Bullock’s remarks at a Melbourne University event on Wednesday evening, as any hawkish tone could provide further support for the Australian dollar. A softer US dollar has also underpinned the currency, amid ongoing uncertainty over President Donald Trump’s tariff plans.