Dutch International: Market Expectations of Interest Rate Hike Excessive, Australian Dollar at Risk of Falling.

Francesco Pesole from ING Bank stated in a report that there is a risk of the Australian dollar weakening, as the market's expectations for further interest rate hikes appear to be too aggressive. He pointed out that if the Reserve Bank of Australia raises interest rates by the expected 25 basis points, the market may interpret sufficient reasons from the policy statement to bet on further rate hikes in the future. The RBA raised its June inflation forecast to 3.7%, but the inflation expectation of 3.2% at the end of the year "is not enough to justify the urgent need for another rate hike". He stated that with interest rate expectations already factored in and the possibility of the US dollar rebounding, the Australian dollar's gains after the RBA decision should gradually be reversed.