30.01.202601:49:22UTC+00Australian Dollar Set for 2nd Weekly Gain

The Australian dollar is trading at approximately $0.701, maintaining its position near a three-year peak and poised for a second consecutive weekly increase due to the weakening US dollar and rising expectations of an imminent domestic interest rate hike. Market participants are currently factoring in around a 70% likelihood of a 25 basis point increase in the cash rate, with an anticipated total tightening of 50 basis points over the year spurred by unexpectedly high inflation figures. The Reserve Bank of Australia is scheduled to convene on Tuesday, with the country's four major banks predicting a rate rise to 3.85%. However, there remains some uncertainty about whether the decision will secure unanimous support. Economists project a hawkish stance but perceive the move to be a solitary adjustment rather than a precursor to continued tightening. Should the RBA proceed with a rate increase, it will align with Japan as the sole central banks in the developed world raising rates, despite expectations for the US Federal Reserve to implement two rate cuts this year. The US dollar continues to be under pressure, potentially facing additional declines amid President Trump's new tariff threats and escalating geopolitical tensions.