AUSTRALIAN DOLLAR CONTINUES TO GAIN GROUND DUE TO HAWKISH RBA
- The Australian Dollar remains stronger due to the hawkish sentiment surrounding the RBA’s policy outlook.
- RBA Governor Michele Bullock stated that near-term rate cuts do not align with their current strategy.
- The US Dollar struggles as recent employment data fueled higher odds of a Fed rate cut in September.
The Australian Dollar (AUD) extends its gains against the US Dollar (USD) for the second consecutive session on Wednesday. This upside is attributed to the Reserve Bank of Australia's (RBA) monetary policy decision on Tuesday. The RBA maintained the Official Cash Rate (OCR) at 4.35% for the sixth time.
RBA Governor Michele Bullock highlighted the ongoing risk that inflation might take too long to return to target and noted that interest rates might need to remain higher for an extended period. Bullock stated that a near-term reduction in the cash rate does not align with their current strategy.
However, the second-quarter inflation data has diminished expectations for another RBA rate hike. Markets estimate an RBA rate cut in November, a move anticipated much earlier than previously forecasted for April next year.
The AUD/USD pair could further strengthen as the US Dollar receives pressure since markets expect a more aggressive rate cut starting in September after the weaker US employment data in July raised the fear of a looming US recession
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