SYDNEY, Jan 6 (Reuters) - The Australian dollar moved further away from two-year lows on Monday, although a likely soft reading on monthly inflation could heap pressure on it again now that the country's central bank has turned dovish.
The Aussie edged up 0.3% to $0.6235, climbing for the third straight session. However, it is still perilously close to its 2022 low of $0.6170 and a break there would take it to levels not seen since the panic of the early days of the pandemic in 2020.
It also reclaimed some of the recent losses on different crosses, up 0.5% on the Japanese yen and 0.3% on the Chinese yuan .
The kiwi dollar also rose 0.3% to $0.5629 on Monday, up for three straight sessions. It has support at its 2022 nadir of $0.5512.
After a holiday thinned trading week, 2025 is kicking into higher gear with releases of U.S. services PMI and the nonfarm payrolls report this week. On the domestic front, Australia will publish a monthly reading on inflation and retail sales figures.
Wednesday figures on consumer prices for November will help refine forecasts for the whole fourth quarter, which could be crucial in deciding whether the RBA cuts interest rates in February.
A Reuters poll of economists expects headline inflation to pick up to an annual rate of 2.3% in November, from 2.1% the previous month.
"Markets may knee-jerk react to a higher headline print, particularly after the most recent jobs report," said Stephen Wu, an economist at the Commonwealth Bank of Australia.
"But we note that it is the underbelly of the inflation data that will be what the RBA focuses on," said Wu, adding that CBA forecasts the closely watched trimmed mean measure to come in at a quarterly rate of 0.6%, lower than the RBA's forecast.
Markets imply around a 55% chance the Reserve Bank of Australia $(RBA)$ will cut its 4.35% cash rate in February, and is fully priced for a quarter-point move in April. 0#AUDIRPR
Rates are seen around 3.55% by the end of 2025, compared with 3.95% for the Fed.
Retail sales data is due on Thursday. Economists predict a solid 0.9% rise in November helped by the Black Friday sales event, although it is unclear if that is a sign of consumer demand picking up sustainably.
(Reporting by Stella Qiu; Editing by Jacqueline Wong)
((yifan.qiu@thomsonreuters.com))
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