The Aussie held firm as longest bets on the RBA's stance are expected to turn hawkish

(1) The Australian dollar was blocked near its high since April 11 on Monday and is currently trading at 0.6611 as investors bet on a more hawkish tone from the RBA's policy meeting this week, and even a rate hike is not out of the question. (2) The Reserve Bank of Australia (RBA) will conclude its two-day meeting on Tuesday, and given that the Central Bank has been on hold since November, it is widely expected to keep the Intrerest Rate at 4.35% this time around. (3) All but one of the 25 analysts surveyed in the Reuters poll held this view, and the only analyst who held a different view believed that Intrerest Rate could be raised to 4.6% given the unexpectedly stubborn inflation in the first quarter. (4) Market Intrerest Rate futures pricing indicates a 10% probability of a rate hike, rising to 40% by September. (5) Four major local banks – ANZ, Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Westpac Bank – still expect interest rate cuts to be the next step, but not until November at the earliest. (6) However, recent domestic high inflation data may force the RBA to raise its near-term inflation outlook and test the Central Bank's confidence that inflation can return to the 2-3% target range from 3.6% in the first quarter by the end of 2025. (7) "While we don't expect the committee to explicitly discuss rate hikes, Tuesday's communications will be more hawkish than in March," said Adam Boyton, head of Australian economics at ANZ. ” (8) NAB analysts expect the RBA to return to a downright tightening bias now after turning neutral in March, but the CBA and Westpac doubt that the Central Bank's pivot will be so rapid. (9) Last Friday hit a two-month high of $0.6650 after the release of a weak U.S. jobs report, with the main resistance level at the March high of $0.6667