• AUD/USD extends the rally around 0.6675 in Monday’s early Asian session. 
• The US Core PCE inflation rose 2.6% YoY in May, compared to 2.6% in April. 
• The stubborn inflation in Australia pushed back the expectation that the RBA would cut rates, boosting the Aussie. 

The AUD/USD pair trades on a stronger note near 0.6675 during the early Asian session on Monday. The growing speculation that the US Federal Reserve (Fed) would cut interest rates in 2024 weighs on the Greenback across the board. 

Inflation in the United States eased to its lowest annual rate in more than three years. The US Personal Consumption Expenditures (PCE) Price Index increased 2.6% YoY in May, compared to 2.7% in April, according to the US Bureau of Economic Analysis on Friday. This figure came in line with market expectations. The core PCE inflation rose 2.6% YoY in May from 2.8% in April, in line with estimation. 

The US inflation report indicated a slow downward trend in consumer price growth in the US, triggering the chance of a Fed rate cut later this year. This, in turn, exerts some selling pressure on the US Dollar (USD) and acts as a headwind for AUD/USD. Investors are now pricing in 53% odds that the Fed will cut rates in the September meeting, according to the CME FedWatch tool. 

On the Aussie front, the elevated inflation in Australia pushed back the expectation that the Reserve Bank of Australia (RBA) would cut the interest rate, which lifts the Australian Dollar (AUD). Last week, RBA Assistant Governor Christopher Kent said that the Australian central bank is alert to upside risks to inflation and wants to see evidence of a further easing in inflation before considering interest rate cuts. The RBA is foreseen to delay rate cuts, making it one of the last G10 country central banks to adopt a reduction policy. These delayed cuts might enhance the further strengthening of the Aussie.