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20/08/24
61
AUD’s Rally Runs Out of Momentum
On Tuesday, the Australian dollar was steady after pounding the US dollar over the last two sessions. AUD/USD traded at about 0.6729, down 0.04% for the day in the European session.
The RBA minutes from the prior meeting reiterated that interest rates won’t be falling soon. RBA members debated hiking rates at the meeting but believed that maintaining rates would balance the risks better.
The members were concerned about the risk of higher inflation and believed a hike would have been required if inflation risks had risen “substantially”. The minutes showed that members saw a rate cut as unlikely in the near term and that rates would likely have to stay unchanged for an “extended time”.
The Governor of the RBA has displayed the same hawkish tone since the meeting and stated that it was not likely that the central bank would cut rates in the next 6 months.
The central bank has maintained its “higher for longer” stand and has kept the cash rate at 4.35% for 7 straight meetings. The RBA won’t be changing its tune soon although it is out of sync with the markets, which have priced in the first rate cut in Nov.
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