AUD/USD fell on Tuesday, trading near 0.6500 at the time of writing, down 0.60% for the day. The Australian Dollar (AUD) extended its decline after the Reserve Bank of Australia (RBA) left the Official Cash Rate (OCR) unchanged at 3.6%, a move that aligned with market expectations.
The central bank’s decision reflected its cautious approach as inflation remains above target, despite signs of easing domestic demand. Data released last week showed Australia’s Consumer Price Index (CPI) rising 1.3% in the third quarter, surpassing forecasts of 1.1%.
RBA signals neutral stance amid persistent inflation
During her post-meeting press conference, RBA Governor Michele Bullock acknowledged that core inflation above 3% was “not ideal,” though she described the current policy stance as “close to neutral.” Bullock refrained from providing forward guidance on when or by how much the central bank might adjust policy, emphasizing the uncertainty surrounding inflation dynamics and the broader economic outlook.
USD strengthens as Fed rate cut expectations fade
The US Dollar (USD) strengthened as markets scaled back expectations for additional Federal Reserve (Fed) rate cuts this year. The US Dollar Index (DXY) hovered near a three-month high around 100.00, reflecting renewed investor confidence in the Greenback.
Recent remarks from Fed officials, including Lisa Cook and Austan Goolsbee, offered mixed views some highlighting persistent inflation risks, while others pointed to signs of cooling in the labor market. Market pricing now reflects about a 70% probability of a 25-basis-point rate cut in December, down from over 90% a week earlier.
Market focus turns to Australian PMI data
Looking ahead, attention shifts to Australia’s upcoming Purchasing Managers Index (PMI) release, which could provide fresh insight into domestic economic momentum and influence short-term moves in the Aussie.
