The dollar eased on Tuesday from its rally at the start of the week, but hovered near a one-month peak as traders raised their forecasts of U.S. Federal Reserve interest rate levels needed to tame inflation.
The Australian dollar, meanwhile, surged in the aftermath of the Reserve Bank of Australia’s (RBA) interest rate decision, rising as much as 1% to an intra-day high of $0.6952.
The RBA on Tuesday raised its cash rate by an expected 25 basis points, and signalled further rate hikes ahead.
Wrapping up its February policy meeting, the RBA said core inflation had been higher than expected and higher rates would be needed to ensure that inflation returns to its target of 2%-3%.
Elsewhere, markets were recovering from the shock of Friday’s jobs report in the United States, which showed that non-farm payrolls surged by an eye-watering 517,000 in January, pointing to a stubbornly resilient labour market.
The report, which wrongfooted traders banking on an imminent pause in the Fed’s rate-hiking cycle, gave the U.S. currency a leg up in previous sessions, though it gave back some of those gains in Asia trade on Tuesday.
This report’s information was first seen on REUTERS; to read more, click this link.
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