AUD/USD slumps to near 0.6550 as Trump trades swell, US inflation in focus

• AUD/USD stumbles to near 0.6550 as the US Dollar extends its rally on so-called 'Trump trades'.
• Investors await the US inflation data for October, which will be published on Wednesday.
• The RBA is expected to maintain its interest rates at its current levels by the year-end.

The AUD/USD pair falls sharply to near 0.6550 in North American trading hours on Tuesday. The Aussie pair weakens as traders ramp up their bets in those assets that are expected to perform better in US President-elected Donald Trump's administration. The US Dollar (USD) has been one of the key beneficiaries of so-called 'Trump trades' as Trump's policies are expected to boost United States (US) economic growth.

Trump vowed that he would raise import tariffs by 10% universally and lower corporate taxes in his election campaign, a scenario that will boost demand for domestically-produced goods and services, labor demand, and business investment.

The US Dollar Index (DXY), which gauges Greenback's value against six major currencies, climbs to near 105.90, the highest level seen in more than four months.

Meanwhile, investors shift focus to the US Consumer Price Index (CPI) data for October, which will be published on Wednesday. Economists expect the headline inflation to have accelerated to 2.6% from 2.4% in September, with core CPI - which excludes volatile food and energy prices - rising steadily by 3.3%.

The Australian Dollar (AUD) underperforms on Tuesday even though the Reserve Bank of Australia (RBA) is not expected to cut its Official Cash Rate (OCR) in the near term. The RBA is more focused on diminishing upside risks to inflationary pressures, with officials remaining confident over stability in the labor market.