AUD/USD falls further to near 0.6500 after RBA holds interest rates steady at 3.6%

AUD/USD tumbles to near 0.6500 as the Australian Dollar underperforms following the RBA’s monetary policy announcement.
The RBA held interest rates steady at 3.6%, as expected, as inflation remains higher.
Easing Fed dovish bets have strengthened the US Dollar.

Sagar Dua FXStreet

The AUD/USD pair revisits the 10-day low, slightly below 0.6500, during the European trading session on Tuesday. The Aussie pair is down almost 0.6% from its previous close after the Reserve Bank of Australia’s (RBA) monetary policy announcement, in which it kept its Official Cash Rate (OCR) steady at 3.6%, as expected.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.13%	0.52%	-0.46%	0.14%	0.56%	0.72%	0.09%
EUR	-0.13%		0.38%	-0.60%	-0.00%	0.42%	0.58%	-0.04%
GBP	-0.52%	-0.38%		-0.98%	-0.38%	0.04%	0.20%	-0.43%
JPY	0.46%	0.60%	0.98%		0.61%	1.03%	1.18%	0.55%
CAD	-0.14%	0.00%	0.38%	-0.61%		0.43%	0.57%	-0.05%
AUD	-0.56%	-0.42%	-0.04%	-1.03%	-0.43%		0.16%	-0.47%
NZD	-0.72%	-0.58%	-0.20%	-1.18%	-0.57%	-0.16%		-0.63%
CHF	-0.09%	0.04%	0.43%	-0.55%	0.05%	0.47%	0.63%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

The RBA was expected to maintain the status quo for the second time in a row, as inflationary pressures in the Australian economy have remained higher than the tolerance level. Last week, the Australian Bureau of Statistics showed that the Consumer Price Index (CPI) rose at a faster pace of 1.3% in the third quarter of the year against estimates of 1.1% and the prior reading of 0.7%.

Following the monetary policy announcement, RBA Governor Michele Bullock stated that annual core inflation above 3% is “not ideal” and expressed the need for a “little bit of tightness that will take a little bit of heat out of the economy to bring inflation back down”. Bullock refrained from guiding on when and how much the RBA will cut interest rates, citing that “there is still much uncertainty on inflation”.

Going forward, the Australian Dollar (AUD) will be influenced by the Trade Balance data for September, which will be released on Thursday.

Meanwhile, the US Dollar (USD) trades firmly on easing bets supporting more interest rate cuts by the Federal Reserve (Fed) this year. During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, refreshes three-month high near 100.00.

The CME FedWatch tool shows that the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has eased to 67.3% from 94.4% seen a week ago.

Economic Indicator

RBA Interest Rate Decision

The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.

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