The Australian Dollar is the best performer among major currencies in an otherwise calm start tobe the year. The Aussie appreciates nearly 0.5% against the US Dollar in the daily chart, so far, buoyed by a positive market sentiment and heightened hopes that the next move by the Reserve Bank of Australia (RBA) will ber a rate hike.

The hawkish comments by RBA Governor Michelle Bullock, after the December 9 monetary policy decision, and the minutes of the meeting, revealed that policymakers' concerns about inflation have taken center stage, and that the possibility of a rate hike was at the table last month.

Consumer inflation accelerated to a 3.8% yearly pace in October, from 3.6% in September and 3.2% in August. November's inflation report is due next week, and wage growth figures suggest that price pressures might have continued growing. If that is the case, bets of an upcoming RBA rate hike are likely to underpin the Aussie's appreciation.

In the US, on the contrary, the Federal Reserve (Fed) is still halfway through its easing cycle. Recent US data has been fairly positive, including Wednesday's weekly Jobless Claims figures, but that will not deter US President Donald Trump from replacing Chairman Jerome Powell with a dovish partisan at the end of his term in May.

Trading volumes remain thin on Friday, with markets in Japan and China closed on New Year's festivities. The only event worth mentioning will be the US S&P Global Manufacturing PMI release, which is expected to confirm that the sector's business activity eased to 51.8 in December from 52.2 in November, still at levels consistent with moderate activity growth.

Source: Fxstreet