Australian Dollar Weakens as US Dollar Remains Strong Amid Fed’s Less Dovish Stance
The Australian Dollar (AUD) extended its decline against the US Dollar (USD) for the third straight session on Tuesday. Traders now focus on Australia’s third-quarter Consumer Price Index (CPI) data, due on Wednesday, as they seek further insights into the Reserve Bank of Australia’s (RBA) potential monetary policy direction.
The AUD’s decline may be limited by the Reserve Bank of Australia’s aggressive stance on its policy outlook. The RBA has indicated that the current cash rate of 4.35% is sufficiently capped to guide inflation back into its 2%-3% target range while still supporting employment. As a result, a rate cut is unlikely anytime soon, especially next month at the earliest.
The US Dollar (USD) strengthened as positive US economic data from last week showed continued economic resilience. This supports sentiment for a nominal interest rate cut by the Federal Reserve (Fed) in November.
Traders await the release of preliminary US Q3 Gross Domestic Product (GDP) figures and the October Nonfarm Payrolls (NFP) report, which could provide key insights into the timing and pace of the Federal Reserve's (Fed) anticipated interest rate cuts.
Source: FXStreet
