The Australian dollar traded steadily around $0.70 on Tuesday, holding on to strong gains from the previous session as investors awaited the latest monetary policy decision from the Reserve Bank of Australia (RBA). The central bank is widely expected to raise the cash rate by 25 basis points to 4.1%, following its February hike that brought the rate to 3.85%.
The anticipated increase underscores the RBA’s continuing concern over stubbornly high inflation, which has been aggravated by a recent surge in oil prices. Energy markets have been rattled by rising geopolitical tensions in the Middle East, particularly disruptions to crude shipments through the Strait of Hormuz, a key artery for global oil supply.
Investors will closely follow RBA Governor Michele Bullock’s post-meeting press conference for guidance on the future trajectory of interest rates. Market focus will then shift to Australia’s labor market data due on Wednesday, which will be scrutinized after Governor Bullock recently highlighted that labor market conditions remain tight.
