AUD/USD Plunges as US ISM Data Improves

On Tuesday, the Australian dollar remained consolidated and on the defensive. The U.S. dollar received a boost after U.S. ISM manufacturing purchasing managers’ indexes improved and U.S. Treasury yields surged overnight. This development has created headwinds for the AUD/USD pair. The minutes of the Reserve Bank of Australia’s March meeting showed that the central bank was not considering the option of raising interest rates.

With inflation continuing to be higher than in other countries and a tight job market, the Reserve Bank of Australia is expected to maintain the current cash rate at least until November. Despite concerns about potential swings in inflation, experts suggest the trend is unlikely to prevent the Reserve Bank of Australia from eventually easing monetary policy.

The U.S. dollar index rose for a fifth consecutive session. The trend was attributed to traders lowering expectations for a quarter-point rate cut by the Federal Reserve at its June meeting. However, Federal Reserve Chairman Powell said on Friday that recent U.S. inflation data were in line with the expected path, which strengthened the Fed’s stance of adjusting interest rates during the year.

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