AUD/USD remains lackluster as PBOC leaves PLR unchanged

• AUD/USD has not displayed any significant move on the maintenance of the status quo by the PBOC.
• PBOC has kept its five-year PLR at 4.45% and one-year PLR at 3.70%.
• RBA Lowe is expecting a higher inflation rate for June and more rate hikes over the months ahead.

The AUD/USD pair has remained muted as the People’s Bank of China (PBOC) has kept its monetary policy unchanged. The PBOC has kept its five-year Prime Lending Rate (PLR) at 4.45%. Also, the one-year loan prime rate has remained stable at 3.70%

It is worth noting that Australia is a leading trading partner of China and eventually has a significant impact on the AUD/USD pair. Meanwhile, the USD/CNH pair has surged strongly and has recorded an intraday high of 6.7457.

The aussie has been performing stronger against the greenback this week after the long-run inflation expectations in the US slipped to 2.8% from June’s print of 3.1%. The US dollar index (DXY) felt the heat as lower inflation expectations indicate that policy tightening measures are near to conclusion. And, the Federal Reserve (Fed) will diminish the momentum of raising interest rates.

Adding to that, the odds of a 1% rate hike by the Fed in its July monetary policy meeting have trimmed significantly. As per CME’s FedWatch Tool, the expectations of a rate hike by 1% were as high as 80% last week, which have trimmed to near 30%. However, higher odds of a rate hike announcement are still intact.

On the Aussie front, comments from Reserve Bank of Australia (RBA) Governor Philip Lowe at ''The Australian Strategic Business Forum – Melbourne'' will strengthen the antipodean further. The comments from RBA Lowe indicate that investors should brace for higher inflation in June. To contain price pressures, the RBA will dictate more rate hikes over the months ahead.