14.01.202602:26:48UTC+00Australian Dollar Hovers Near 2-Week Low

The Australian dollar hovered around $0.668, close to a two-week low, as investors weighed the likelihood of a February interest rate hike. The probability of the Reserve Bank increasing its cash rate by 0.25% next month has decreased to approximately 27%, down from nearly 40% only last week, although markets still anticipate a 76% chance of a hike by May. Recent data, including a slight retreat in November's inflation figures and diminishing consumer confidence, have created uncertainty regarding a February rate adjustment, indicating that the Reserve Bank of Australia (RBA) might hold off. Additionally, a 0.2% dip in job vacancies during the November quarter highlights stable labor demand. However, robust household spending in November could keep inflation levels high, possibly warranting tighter monetary policy. The central bank's decision now largely hinges on the forthcoming Q4 Consumer Price Index (CPI) data. A stronger-than-expected core inflation reading may increase pressure for an earlier rate increase. Furthermore, next week's December employment report will be closely watched by markets for further insights into monetary policy decisions.