On Thursday, the Australian dollar remained steady, hovering around $0.668 and trading near its lowest point in two weeks. This stability occurred as geopolitical tensions dampened global risk sentiment, despite investors evaluating a hawkish domestic policy outlook. The Australian dollar, often seen as an indicator of global risk appetite, struggled due to a series of geopolitical developments. US President Donald Trump softened his stance on striking Iran amidst its civil unrest crackdown, and the US withdrew some Middle East personnel following Iran's warning of retaliating against American sites if attacked.
In domestic news, Australian consumer inflation expectations remained stable at 4.6% in January, reflecting ongoing consumer concerns about price pressures, showing little change from December. Currently, markets have priced a 27% probability of a rate hike by the Reserve Bank in February, which rises to 76% by May. The focus now shifts to the upcoming Q4 Consumer Price Index (CPI) release later this month, along with next week's December jobs report, both of which are anticipated to provide further insights.