The Australian dollar stood on hefty gains on signs inflation may be peaking, and hopes central banks will slow the pace of interest rate increases.
The Australian dollar consolidated its hefty gains on Monday as global investors piled into equities and riskier assets on signs inflation may be peaking, fuelling hopes that central banks may moderate their pace of interest rate increases.
The benchmark rate is currently in the range of 2.25 per cent to 2.5 per cent, and is projected to peak at 3.7 per cent by Christmas. The difference between two-year yields in Australia and the US has moved violently since June with the gap now at minus 23 basis points, from 40 basis points. Commonwealth Bank and ANZ economists expect a 0.5 percentage point lift in September given the current inflationary pressures in the economy.