Australian Dollar declines to near 10-month lows
AUD/USD loses ground for the third consecutive day, trading around 0.6840 during Asian hours on Thursday. The pair falls to nearly 10-month lows as the US Dollar (USD) receives support from an increasingly hawkish Federal Reserve (Fed) policy outlook.
The Australian Dollar (AUD) has slipped to near 10-month lows, trading around 0.6840 against the US Dollar (USD) during Asian trading hours on Thursday. The decline comes as the US Dollar receives support from an increasingly hawkish Federal Reserve policy outlook. Rising US Consumer Price Index (CPI) inflation data has fueled expectations of a December rate hike, with markets pricing in an 87% probability and a 13% chance of a 50 basis point increase.
Australia's Consumer Inflation Expectations remained steady at 5.3% in November, reflecting the highest level since June. Despite persistent price pressures, the AUD faces headwinds as traders speculate that the Reserve Bank of Australia (RBA) may have exhausted its tightening cycle and will maintain interest rates steady. Analysts warn that rising global bond yields are impacting leveraged housing markets in Australia, increasing funding costs and exposing highly indebted households and the housing market.
The RBA's interest rate decisions significantly impact the AUD, as Australia is a resource-rich country with a strong reliance on Iron Ore exports. The health of China, Australia's largest trading partner, and the price of Iron Ore are key drivers of the AUD's value. Iron Ore prices and Trade Balance also influence the AUD, as higher export demand typically strengthens the currency.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
