AUD/USD declined at the start of the week towards 0.6270 as US Dollar (USD) gains evaporated following signs that United States (US) friction with Colombia could be cooling. Meanwhile, the Federal Reserve (Fed) is widely anticipated to keep interest rates unchanged this week, with traders searching for any insight into policymakers' stance amid ongoing calls from President Donald Trump for immediate cuts.
The Australian Dollar (AUD), however, faces headwinds ahead of the release of domestic inflation data, which will determine the Reserve Bank of Australia's (RBA) February rate decision.
The US Dollar initially firmed after President Trump threatened a 25% levy on Colombia for rejecting deportees. The Greenback later fell back as the White House confirmed Colombia's acquiescence, dousing trade-war fears.
Fed policy will be the focus. The US central bank meets on Wednesday and is likely to leave rates within 4.25%-4.50%.
Market participants will examine how policymakers react to Trump's demands for swift interest-rate cuts and assess the potential for future moves.
Australian CPI will be pivotal. Fourth-quarter inflation data due Wednesday are forecast at 2.5% year-on-year, down from 2.8%, and a 0.3% quarterly increase following the previous 0.2%.
Weak prints could fortify bets that the RBA may begin rolling back its policy tightness as early as the upcoming meeting.(Cay) Newsmaker23
Source: Fxstreet
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