AUD/USD stalls ahead of Reserve Bank of Australia’s decision

• AUD/USD steady at 0.6624; focus on upcoming RBA decision, quiet US data, and UK bank holiday.
• Wall Street ends higher, driven by optimism over potential Fed rate cuts.
• ANZ analysts anticipate RBA will hold rates, possibly adopting a hawkish stance due to inflation trends.

The Australian Dollar registered minuscule gains compared to the US Dollar as traders braced for the Reserve Bank of Australia (RBA) monetary policy meeting. A scarce economic docket in the United States (US) and a bank holiday in the UK were the main drivers behind the “anemic” AUD/USD price action. At the time of writing, the pair trades at 0.6624, virtually unchanged.

Australian Dollar sees limited movement as markets anticipate key RBA monetary policy

Wall Street finished the session with gains amid an upbeat market mood due to investors' confidence that the Federal Reserve would begin to lower rates faster than expected. Meanwhile, on Tuesday, AUD/USD traders brace for the RBA’s monetary policy decision.

The RBA is expected to keep the cash rate unchanged at 4.35%, though there is speculation that the central bank might shift slightly hawkish following higher-than-expected inflation figures for Q1 2024. Analysts at ANZ Bank commented that they expect the RBA to tilt hawkishly in its post-meeting statement.

They added the RBA’s board might choose a form a word, such as “the risks of inflation not returning to the target in a reasonable timeframe has risen,” followed by “accordingly the Board is not ruling anything in our out.”

On the US front, Federal Reserve officials crossed the newswires. President of the Federal Reserve Bank of Richmond, Thomas Barkin expressed that he anticipates high interest rates will further slow the economy and help bring inflation down to the 2% target. Meanwhile, John Williams, the New York Fed President, mentioned that rate cuts are on the horizon, but the timing will be based on a comprehensive review of the data.