Australian Dollar finds a floor as Oil retreat loosens USD’s grip
The Australian Dollar recovered some ground versus the US Dollar on Thursday, following the Federal Reserve’s monetary policy decision on Wednesday, which witnessed a 0.25% rate hike and paved the way for further tightening.
The Australian Dollar bounced back against the US Dollar on Thursday, following the Federal Reserve's decision to hike interest rates by 0.25%. The AUD/USD pair traded at 0.7110 after climbing above the 50- and 100-day simple moving averages. Optimism grew due to a potential de-escalation of the Middle East conflict, which caused oil prices to fall, weakening the US Dollar.
The US Dollar Index (DXY) dropped 0.10% to 100.23 after the Fed raised rates for the first time in three years. Fed Chair Jerome Powell stated that inflation remains too high, and the Fed's dot plot suggests another rate hike may occur soon. Meanwhile, Australia's economic data was absent, but the Reserve Bank of Australia (RBA) Governor Michele Bullock was expected to speak later that day.
The level of interest rates set by the RBA is crucial for the Australian Dollar, as Australia is a resource-rich country with iron ore as its biggest export. China, its largest trading partner, plays a significant role in determining the value of the AUD, as higher Chinese demand for raw materials and goods can boost the Australian Dollar.
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