Australian Dollar loses ground as traders expect Fed to slow pace of rate cuts
- The Australian Dollar declines following the lower CPI data from its largest trading partner, China.
- The Commonwealth Bank of Australia expects the RBA to implement a 25 basis point rate cut in December.
- The US Dollar appreciates as traders expect the Fed to slow the pace of borrowing cost reductions.
The Australian Dollar (AUD) edges lower after two days of gains against the US Dollar (USD) on Monday. The AUD/USD pair receives downward pressure from the lower-than-expected September Consumer Price Index (CPI) data from its major trading partner China released on Sunday.
The AUD may have attracted sellers after a detailed note from the Commonwealth Bank of Australia indicated expectations that the Reserve Bank of Australia (RBA) will implement a 25 basis point rate cut by the end of 2024. The report suggested that a stronger disinflationary trend than the RBA anticipates is essential for the Board to consider easing policy within this calendar year.
The decline of the AUD/USD pair could also be linked to a stronger US Dollar (USD), fueled by expectations that the US Federal Reserve (Fed) will slow the pace of borrowing cost reductions more than previously anticipated. According to the CME FedWatch Tool, the markets are pricing in an 86.9% chance of a 25 basis point rate cut in November, with no expectation for a 50-basis-point reduction.
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
FOLLOWME Trading Community Website: https://www.followme.com
Hot
No comment on record. Start new comment.