The Australian dollar is pressured below $0.705, with the probability of another rate hike this year dropping to about 50%, as the US dollar strongly dominates the trend.

⑴ The Australian dollar remained below 0.705 US dollars, hovering near a ten-week low and is expected to post a modest weekly decline. The currency was pressured by a stronger US dollar and diminishing expectations for further rate hikes from the Reserve Bank of Australia. After the Reserve Bank of Australia kept its cash rate unchanged this week, the market increasingly believes the tightening cycle has ended, with the probability of another rate hike this year dropping to around 50%.⑵ Reserve Bank of Australia Governor Bullock maintained that further tightening may occur if inflation persists. However, the market believes that the second quarter inflation data would need to be significantly above expectations to trigger any further action. Meanwhile, the US dollar index climbed to a one-year high, and the Federal Reserve's hawkish pause prompted traders to increase bets on additional rate hikes. Nearly half of policymakers are forecasting at least one more rate increase this year due to rising inflation concerns.⑶ The temporary US-Iran peace agreement and the resumption of energy flows through the Strait of Hormuz have provided some support for the risk-sensitive Australian dollar. However, under the dominance of a strong US dollar, the Australian dollar's rebound potential remains limited. Going forward, attention will be focused on Australia's second-quarter inflation data and changes in global risk sentiment.