AUD/USD remains under pressure as RBA holds rates

The Australian dollar gained ground earlier but has reversed directions and has edged lower. In the European session, AUD/USD is trading at 0.6778, down 0.24% at the time of writing.

RBA maintains cash rate at 4.35%

The Reserve Bank of Australia held the cash rate at 4.35% for a seventh straight time today. The markets had fully priced in this move and the Australian dollar’s reaction has been muted.

At her press conference, RBA Governor Bullock said that policymakers had discussed the possibility of raising rates at today’s meeting. This has become a pattern for the RBA, which considered hiking rates in previous meetings but opted to hold rates each time. Bullock dropped a bombshell when she said that the central bank was unlikely to lower interest rates for at least six months due to inflation being too high.

Bullock said that the markets were “a little bit ahead of themselves” in pricing rate cuts, but the markets still expect the Bank to start lowering rates before the end of the year. The RBA is currently forecasting that inflation, which rose to 3.8% in Q2, will not drop to the midpoint of the 1-3% target band until mid-2026.

The RBA Governor noted the sudden meltdown in global stock markets, but said this development had not factored in to today’s rate decision. The rout stocks was a reaction to a soft US employment report on Friday, which has raised fears of a US recession. The Australian dollar wobbled on Monday, falling as much as 2.4% before recovering most of these losses. The S&P ASX 200 index, the country’s benchmark stock index, declined by 3.7% on Monday but has stabilized today.

.

AUD/USD Technical

• There is resistance at 0.6562 and 0.6627
• 0.6455 and 0.6390 are the next support levels

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.