Australian Dollar holds losses on unchanged PBOC rates

The Australian Dollar experienced a decline after a few days of gains, trading near 0.6970 during Asian hours on Tuesday. The decline happened as the Australian Dollar faced pressure due to the People’s Bank of China (PBOC) maintaining its benchmark Loan Prime Rates (LPRs) unchanged. The PBOC kept the one-year LPR at 3.00% and the five-year LPR at 3.50%.

However, the AUD might gain support following hawkish remarks from a top central bank official. The Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent suggested that interest rates might be too restrictive, as neutral interest rates are rising both in Australia and internationally. The RBA's Deputy Governor Andrew Hauser's upcoming speech this week could provide more insight into the monetary policy outlook.

Investors are now focusing on the upcoming speech by RBA Deputy Governor Andrew Hauser for further guidance on the monetary policy. The Federal Reserve Chair Kevin Warsh expressed optimism about the US economy last week, but he did not indicate whether additional rate hikes might occur. According to the CME FedWatch tool, traders expect the Federal Reserve to maintain current interest rates at its October policy meeting, with an 82.8% probability of a rate hike in December.