AUD/USD: RBA hike fails to lift Australian Dollar – ING
ING’s Francesco Pesole reports the Reserve Bank of Australia (RBA) raised rates to 4.60% as expected, but AUD/USD fell below 0.700 as Governor Michele Bullock revealed policymakers had considered holding rates due to housing and global risks.
The Reserve Bank of Australia (RBA) increased interest rates to 4.60% as anticipated, yet the Australian Dollar (AUD) depreciated below 0.700 against the US Dollar (USD). Governor Michele Bullock disclosed that policymakers contemplated retaining the rate due to housing and global risks. ING, a financial institution, predicts AUD/USD to reach 0.720 in December, provided the Dollar weakens and global liquidity conditions ease.
However, they acknowledge heightened near-term risks for AUD/USD. The RBA's decision to raise rates was expected, and the statement maintained a hawkish tone, suggesting potential inflation pressures and a willingness for further rate hikes if necessary. Nevertheless, the press conference introduced a dovish undertone, leading to AUD underperformance.
The bank anticipates AUD/USD at 0.720 for December, contingent on a weaker Dollar and eased global liquidity. While AUD fundamentals remain robust, the recent decision supports this further, indicating potential outperformance in a bearish USD scenario. However, worsening global conditions have amplified near-term downside risks for AUD/USD.
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