The Australian dollar rose in the Asian market on Tuesday against a basket of global currencies, extending gains for the third day in a row against its US counterpart, recording the highest level in seven weeks, supported by the continued selling of the US currency in the foreign exchange market.

The rise of the Australian dollar is also supported by renewed inflationary pressures on policymakers at the Reserve Bank of Australia, which has led to a decline in the likelihood of an Australian interest rate cut in September.

Price Overview

Exchange rate of the Australian dollar today: The Australian dollar rose against its US counterpart by about 0.2% to (0.6605), the highest since July 24, from todays opening price at (0.6593), recording the lowest level at (0.6589).

On Monday, the Australian dollar gained 0.55% against the US dollar, its second daily rise in a row, after weak US employment data boosted expectations of a US interest rate cut.

US Dollar

The dollar index fell on Tuesday by more than 0.1%, deepening losses for the third consecutive session, recording the lowest level in one and a half months at 97.32 points, reflecting the continued decline of the US currency against a basket of major and minor counterparts.

This decline comes amid ongoing selling of the US dollar, especially after recent US data showed further deterioration in the labor market, reinforcing expectations that the Federal Reserve will deliver deeper interest rate cuts.

According to the CME FedWatch tool, traders are pricing in an 89% chance of a 25-basis-point rate cut at the Federal Reserves September meeting, and an 11% chance of a larger 50-basis-point cut.

Australian Interest Rates

Recent data from Sydney showed inflation in the country rising to its highest level in a year, which renewed inflationary pressures on policymakers at the Reserve Bank of Australia.

Following the above inflation data, the pricing of a 25-basis-point interest rate cut by the Reserve Bank of Australia in September fell from 30% to 22%.

To reprice those odds, investors are awaiting more data on inflation, unemployment, and wages in Australia before the upcoming September 30 meeting.