AUD/USD falls after the RBA’s unexpected decision to slow its monetary tightening
The Australian dollar continues to fall against the greenback, penalized by the solid US employment report and the RBA’s decision to slow down its pace of monetary tightening. AUD/USD even recently broke its September low at around $0.64 while other major currency pairs manage to hold above.
The Australian dollar has been underperforming other major currencies since last week following the RBA’s unexpected decision to hike rates by just 25 basis points, down from 50 basis points in the previous four meetings. The Committee justified the decision by time to assess the impact of the numerous rate hikes since the beginning of the year on the economy, but officials indicated that they would continue to raise them.
Concretely, the underperformance of the Australian dollar since the unexpected decision of the RBA can be explained by the spread of the bond rates of the country with the other regions of the world. The RBA will have to reaccelerate its monetary tightening to hope to see the Australian dollar outperform the other major currencies. However, an outperformance against the greenback seems unlikely, even if the RBA accelerates its tightening, since the US dollar is taking advantage of its safe haven aspect in this very uncertain economic and geopolitical context.
AUD/USD weekly price chart – key levels
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