The AUD/USD pair dropped below 0.6900 during the Asian trading session on Wednesday, pulling back from its recent yearly highs. The decline followed the release of weaker-than-expected Australian Consumer Price Index (CPI) data, which has heightened expectations of a potential rate cut by the Reserve Bank of Australia (RBA). However, the downside pressure on the Australian dollar was cushioned by optimism around China’s economic stimulus measures.
Economic Calendar on 25/09/2024 by fxstreet.com
Earlier in the session, AUD/USD hit a low of 0.6868, reacting to the RBA’s monetary policy decision. Later, during U.S. trading hours, the pair recovered and hit a fresh 2024 high of 0.6883.
As predicted, the RBA kept its Official Cash Rate (OCR) unchanged at 4.35%, a level established in November 2023. During a press conference, RBA Governor Michele Bullock reiterated her cautious stance, confirming that rates would remain steady for now. She also stated that the central bank does not foresee any rate cuts in the near future, as current economic data has not significantly impacted their outlook. This hawkish tone was expected by the market, but the pair still saw a pullback in response.
At the same time, the People’s Bank of China (PBoC) announced various economic support measures, including a 50 basis point cut to the Reserve Requirement Ratio (RRR) and a 0.2% reduction in the seven-day repo rate. The PBoC also outlined plans to support the property market by lowering mortgage interest rates, though specific details on timing were limited.
Later in the session, the AUD/USD rebounded again, bolstered by soft U.S. economic data, which has fueled speculation that the Federal Reserve may cut interest rates by another 50 basis points in its upcoming November meeting. Additionally, Australia is set to release its August Monthly CPI, expected to come in at 2.8%, down from July’s 3.5%.
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