The Australian Dollar gains ground as the RBA and Fed adopt different policy outlooks.
The Reserve Bank of Australia is highly expected to keep interest rates unchanged in the near future.
The US Federal Reserve may deliver more rate cuts by the end of this year.
The Australian Dollar (AUD) retraces its recent losses against the US Dollar (USD) on Thursday. The AUD/USD pair receives support from the divergent monetary policy outlooks between the two central banks. Additionally, the commodity-linked Aussie Dollar found support as China, its largest trading partner, announced a new round of stimulus measures to boost its economy.
The Reserve Bank of Australia (RBA) held the Official Cash Rate (OCR) steady at 4.35% on Tuesday, offering support to the Australian Dollar and bolstering the AUD/USD pair. Additionally, RBA Governor Michele Bullock confirmed that rates will remain on hold for now.
The Federal Open Market Committee (FOMC) lowered the federal funds rate to a range of 4.75% to 5.0% by delivering a bumper 50 basis point rate cut, marking the Fed’s first rate cut in over four years. According to the CME FedWatch Tool, markets are pricing in around 50% chance of 75 basis points to be deducted by the Fed to a range of 4.0-4.25% by the end of this year.
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