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The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Tuesday ahead of the interest rate decision by the Reserve Bank of Australia (RBA) due later in the day. Policymakers are expected to remain cautious, with underlying inflation still above target and labor market conditions relatively tight, reinforcing a restrictive and data-dependent policy stance. The AUD/USD pair holds ground despite the seasonally adjusted Building Permits in Australia falling sharply by 14.9% month-over-month to a four-month low of 15,542 units in December 2025, unwinding a downwardly revised 13.1% increase recorded in the previous month. Australia’s Consumer Price Index (CPI) rose 3.8% YoY in December, accelerating from 3.4% previously. With headline inflation remaining above the RBA’s 2–3% target, recent PMI and employment data reinforce the case for a tighter monetary policy stance. US Dollar declines after recent modest gains The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is edging lower after four days of gains and trading near 97.50 at the time of writing. US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve (Fed) Chair. Markets interpreted Warsh’s appointment as signaling a more disciplined and cautious approach to monetary easing. The US Dollar gained traction as risk sentiment improved after the US Senate reached an agreement to advance a government funding package, thereby averting a shutdown, according to Politico. US producer-side inflation firmed, moving further away from the Federal Reserve’s 2% target and reinforcing the central bank’s policy stance. US PPI inflation holds steady at 3.0% year-over-year (YoY) in December, unchanged from November and above expectations for a moderation to 2.7%. Core PPI, excluding food and energy, accelerated to 3.3% YoY from 3.0%, defying forecasts for a decline to 2.9% and highlighting persistent upstream price pressures. St.…

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Filed under: News - @ February 3, 2026 2:15 am