The Australian dollar weakens as RBA's Bullock signals patience on judging policy

The Australian dollar has weakened following comments from RBA's Bullock, who indicated a cautious approach to policy decisions. She acknowledged in February that inflation was too high and mentioned that while the economy is in a strong position, judging policy is challenging. This statement led traders to adopt a patient outlook. Recently, the RBA raised the Cash Rate by 25 basis points to 3.85%, hinting at two more rate hikes this year, a hawkish surprise compared to the market's expectation of just one hike. Moreover, the latest CPI data showed a trimmed mean Y/Y of 3.4%, which exceeded expectations and initially boosted the Australian dollar. However, after Bullock's comments, traders adjusted their positions, reducing the probability of a back-to-back rate hike in March to 13%. The RBA primarily focuses on quarterly CPI, and strong data could guarantee a rate hike in May.