Join our community of traders FOR FREE!

  • Learn
  • Improve yourself
  • Get Rewards
Learn More

Key points

  • AUD/USD extends pullback from Friday’s 4-month peak
  • RBA policy makers fret over upside inflation risks, June Minutes showed
  • China disappoints with smaller LPR cut

AUD/USD extended losses from the prior trading day on Tuesday, retreating almost 0.6%, after the Reserve Bank of Australia noted in its June policy meeting minutes that the decision to hike rates by 25 basis points was “finely balanced”.

This seemed to have eased concerns that another rate increase was imminent.

RBA also said further rate hikes would depend on how dynamics locally and abroad affect the inflation outlook.

Yet, RBA policy makers noted recent macro data indicated inflation risks in Australia had shifted “somewhat to the upside”. The RBA Board once again stressed on their commitment to do whatever was necessary to bring inflation back down to the 2%-3% target range over a reasonable period of time.

“… we still expect the RBA to raise rates two more times to 4.6%, having penciled in increases in July and August,” Tapas Strickland, head of market economics at NAB, was quoted as saying by Reuters.

The Reserve Bank of Australia has already delivered a total of 400 basis points of interest rate hikes since May 2022, while bringing its cash rate to 4.10% – the highest level since April 2012.

Meanwhile, China reduced on Tuesday its 1-year and 5-year loan prime rates by 10 basis points, which has been the first such move in 10 months. However, markets were expecting larger support to economic recovery in the form of a bigger LPR cut.

Beijing’s decision dragged down the Chinese yuan and the Aussie dollar, which is frequently used as a liquid proxy for the yuan.

As of 7:34 GMT on Tuesday AUD/USD was losing 0.58% to trade at 0.6810. Last Friday the major Forex pair went up as high as 0.6899. The latter has been its strongest level since February 21st (0.6920).

Bond Yield Spread

The spread between 2-year Australian and 2-year US bond yields, which reflects the flow of funds in a short term, equaled -58.0 basis points as of 5:15 GMT on Tuesday, down from -52.7 basis points on June 19th.

TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

Related News

  • New York Times’ shares close flat on Wednesday, company offers buyouts to some of its employeesNew York Times’ shares close flat on Wednesday, company offers buyouts to some of its employees According to a May 31st memo to personnel, New York Times Company (NYT) offered buyouts to a contingent of its newsroom employees in an attempt to streamline editing and production systems.Shares of New York Times Company remained […]
  • Forex Market: GBP/CHF daily forecastForex Market: GBP/CHF daily forecast During yesterday’s trading session GBP/CHF traded within the range of 1.5279-1.5361 and closed at 1.5348, gaining 0.36% for the day.At 6:13 GMT today GBP/CHF was gaining 0.02% for the day to trade at 1.5352. The pair touched a daily high […]
  • USD/CHF close to session highsUSD/CHF close to session highs Through the course of a subdued trade on Tuesday the US dollar moved higher against the Swiss franc, despite the weak housing data, released from the United States on Monday.USD/CHF pair reached a session high at 0.9399 at 9:45 GMT, after […]
  • Gold trading outlook: futures headed for a fourth weekly lossGold trading outlook: futures headed for a fourth weekly loss Gold fell for a seventh consecutive session on Friday as the US dollar remained near the highest since early June, while bearish sentiment was further reinforced by the increased likeliness of a US interest rate hike this year.Gold for […]
  • IBM shares close flat on Thursday, Red Hat acquisition given the green light by EU antitrust regulatorsIBM shares close flat on Thursday, Red Hat acquisition given the green light by EU antitrust regulators International Business Machines (IBM) $34 billion acquisition of software firm Red Hat has reportedly received unconditional approval by EU antitrust regulators on Thursday.IBM shares closed flat at $138.52 in New York on Thursday. The […]
  • Forex Market: USD/KRW daily forecastForex Market: USD/KRW daily forecast During Friday’s trading session USD/KRW traded within the range of 1 023.10-1 029.00 and closed at 1 024.10.At 11:12 GMT today USD/KRW was losing 0.23% for the day to trade at 1 021.70. The pair touched a daily low at 1 021.21 at 3:15 GMT, […]