The Australian Dollar (AUD) traded lower against its major currency peers during the European session on Friday, as investors adopted a cautious stance ahead of the Reserve Bank of Australia’s (RBA) upcoming monetary policy announcement scheduled for Tuesday [1]. The AUD was notably the weakest against the Japanese Yen, declining by 0.19%, and also registered losses against the US Dollar (-0.13%), Euro (-0.15%), and British Pound (-0.11%) [1]. Despite this, the AUD/USD pair remained close to its 10-day high of 0.7205, trading around 0.7195 earlier in the day [1].
Market expectations for the RBA meeting are leaning hawkish, with an April 27-30 Reuters poll indicating that 30 out of 33 economists anticipate a 25 basis point increase in the Official Cash Rate (OCR) to 4.35% [1]. This sentiment is underpinned by persistent inflationary pressures in Australia. Data released on Wednesday showed that the annualized Consumer Price Index (CPI) growth in March was 4.6%, slightly below the estimated 4.7% but a significant rise from 3.7% in February [1].
Investors are also closely monitoring RBA Governor Michele Bullock’s upcoming press conference for insights into the central bank’s policy outlook and the trajectory of inflation, especially given concerns about elevated energy prices stemming from the prolonged closure of the Strait of Hormuz [1].
In the broader currency market, the US Dollar remained under pressure, even as traders appeared confident that the Federal Reserve would keep interest rates steady through the end of the year [1]. Additionally, market participants are awaiting the release of the US ISM Manufacturing PMI data for April, which could further influence currency movements later in the session [1].
CONCLUSION
The Australian Dollar faced downward pressure ahead of the RBA’s policy decision, reflecting investor caution amid persistent inflation and expectations of a rate hike. Market participants are focused on upcoming central bank communications and key economic data releases for further direction. The overall sentiment remains cautious, with medium market impact anticipated.