The Australian dollar traded around $0.71, on track for a roughly 0.5% monthly decline, as markets sharply reduced expectations for further rate hikes amid signs that earlier monetary tightening is beginning to filter through the economy. This comes after a softer-than-expected April inflation print and weaker consumer spending data earlier this week, as well as recent signs of cooling in the labour market, prompted investors to sharply cut the odds of a June rate hike to just 5%. Markets price in a 70% chance of one final move to 4.6% in the last quarter of the year. Focus now turns to a raft of economic data next week, including the final manufacturing PMI survey, trade balance, and key GDP figures, which will provide further clues on the economy’s health. Despite the monthly decline, the Aussie is headed for a modest weekly gain, as reports of a preliminary deal between the US and Iran, including the potential reopening of the vital Strait of Hormuz, lifted global risk sentiment.