The Australian Dollar continues to slide as the Fed enters hike country
Australia's central bank pays more than the Federal Reserve (Fed) does. The cash rate is 4.35%, the Fed's new range is 3.75-4.00% after Wednesday's quarter-point hike, and most of the big Australian banks expect the RBA to raise again before the end of the year, and none of that has helped.
The Australian Dollar has been sliding as the Federal Reserve (Fed) enters a hiking cycle. The Reserve Bank of Australia (RBA) currently has a higher cash rate of 4.35%, compared to the Fed's new range of 3.75-4.00% after Wednesday's quarter-point increase. Despite this, the RBA is expected to raise rates again before the end of the year, while none of the major Australian banks foresee a change.
AUD/USD has been declining for four out of the last five sessions, trading below 0.7100, its lowest level in six weeks. The RBA raised interest rates three times earlier in the year and held the cash rate at 4.35% in August. They have indicated they could raise rates again if inflation remains high. Inflation in Australia was 3.5% in July, with the underlying measure at 3.6%.
The RBA's actions suggest they are still leaning towards further increases. However, the Aussie Dollar's value is influenced by various factors, including global growth and commodity demand, and its trade balance. The RBA's decision to raise interest rates has not translated into a stronger currency, highlighting the complex relationship between monetary policy and currency values.
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