AUD/USD firms as traders brace for Australia Q3 inflation data and Fed decision

The Australian Dollar (AUD) edges higher against the US Dollar (USD) on Tuesday, extending its winning streak for the fifth consecutive session as the Greenback stays under pressure ahead of the Federal Reserve's (Fed) interest rate decision on Wednesday. At the time of writing, AUD/USD trades around 0.6586, up nearly 0.5% on the day and marking its highest level in over two weeks.

Traders are turning their attention to key Australian inflation data due early Wednesday, which could shape expectations for the Reserve Bank of Australia's (RBA) monetary policy path. The third quarter Consumer Price Index (CPI) is forecast to show a notable pickup, with quarterly inflation seen rising 1.1% after 0.7% in Q2, while annual CPI is expected at 3.0%, up from 2.1% in the previous quarter.

The RBA's trimmed mean CPI is projected to climb 0.8% QoQ and hold steady at 2.7% YoY, while the monthly CPI for September is expected to come in at 3.1%, up from 3.0% in August.

A stronger-than-expected inflation print would strengthen expectations that the RBA will maintain a cautious stance at its November 4 monetary policy meeting, potentially bolstering the Aussie. Meanwhile, across the Pacific, the Fed is widely expected to deliver another 25-basis-point rate cut on Wednesday, a move already priced into markets.

Source: fxstreet