Aussie Dollar Slips as Investors Brace for Rate Cut
The Australian dollar declined against the greenback, after data showed inflation eased more than expected, prompting investors to ramp up bets on Reserve Bank of Australia interest rate cuts.
AUD/USD dropped 0.3% to 0.6232, leading declines among major currencies. Money markets boosted bets on a rate cut next month to better than 90%
Selling in response to the weak 4Q inflation data was soaked up in part by exporters meeting their month-end obligations, according to Asia-based FX traders
The trimmed mean of the inflation data “should keep AUD heavy as it represents a genuine step down in the quarterly pace,” said Richard Franulovich, head of FX strategy at Westpac. “That said, with 18bps Feb rate cut risk already priced before this data point and the tariff headline barrage taking a rest today, I suspect AUD can hold above 0.6220 today”.
The Bloomberg Dollar Spot Index eased 0.1% after closing up 0.3% on Tuesday
Yield on 2-year US Treasuries eased 1bp to 4.185% ahead of FOMC interest rate decision later today
USD/JPY down 0.2% to 155.28
EUR/USD gains 0.1% to 1.0441. GBP/USD adds 0.1% to 1.2454
Source: Bloomberg
