The Australian dollar slowly reacts as it trades close to its multi-month high. The currency pair has been gaining momentum since Monday and is now set to climb beyond the recent high. The new week began on a high note and has been steadily rising since mid-year trade around the start of the Asian session. In the past hour, the market has kept its trade close below the 0.70000 significant zone. Several influences and factors could have contributed to the US dollar's recent monthly trade on Monday. This could be largely attributed to bets for smaller Fed rate hikes, which undermined the US dollar and offered some support.
CPI (Consumer Price Index) Makes Headlines for Australian dollar
Positive risk sentiment in the market also contributed to gains in the Australian dollar. Also, looming recession fears capped optimism and acted as headwinds. According to the figures released by the US consumer inflation report last week, the headline CPI increased for the first time in two years in December. There is also speculation that the Fed is nearing the end of its rate-hiking cycle and will increase bets on smaller rate hikes in February. This, therefore, casts a positive light on risk assets, providing an additional boost close to the 0.7000 psychological mark during Asian session trading hours.
The Australian dollar has been on the rise in recent weeks as investors look toward a potential interest rate hike by the Reserve Bank of Australia (RBA). Last week's stronger domestic inflation figure has also added to this optimism. Many investors are now taking a wait-and-see approach before deciding whether or not the AUD/USD has topped out for now. As we look ahead to Tuesday, traders should be keeping an eye on an important Chinese macro report that will be released. This could provide some fresh impetus and further strengthen the position of the AUDUSD if it comes out better.
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