Australian Dollar weakens as robust US data, rising US yields overshadow RBA rate hike
AUD/USD falls to around 0.6910 on Thursday at the time of writing, down 0.48% on the day. The Australian Dollar (AUD) loses ground against the US Dollar (USD) despite the Reserve Bank of Australia’s (RBA) decision to raise interest rates this week, as rising US Treasury yields support the Greenback.
On Thursday, the Australian Dollar (AUD) weakened against the US Dollar (USD) as US economic data and rising yields overshadowed the Reserve Bank of Australia's (RBA) interest rate hike. Despite the RBA's decision to increase interest rates by 25 basis points to 4.6%, the AUD continued to lose ground due to the strength of the US Dollar.
The RBA Governor, Michele Bullock, indicated that further monetary tightening could be considered as the central bank aims to bring inflation closer to its 2% target. However, trade data from Australia revealed a sharp contraction in the trade balance, with the surplus narrowing to A$495 million from A$1.351 billion in July. Imports rose by 5.8%, while exports increased by 3.7%.
The AUD's decline was primarily driven by the robust US Dollar, which was buoyed by the surge in US Treasury yields. The 10-year US Treasury yield hit 5.24%, its highest level since 2002. US economic data, such as the fall in initial jobless claims and the growth in the second quarter GDP, further supported the strength of the US Dollar.
The Federal Reserve (Fed) now expects a 36% chance of an interest-rate hike at the October 27-28 meeting. As a result, AUD/USD traded at 0.6910, staying below key moving averages and indicating a bearish trend.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
Also reported by 1 other outlet
- Dollar hits 17-month high versus euro as bond selloff lifts yields channelnewsasia.com
