The AUD/USD pair experienced a 0.30% decrease on Wednesday, settling near 0.6615, following the dovish Reserve Bank of New Zealand (RBNZ) decision. The potential decline in demand for Australian exports due to the slowdown in China may further impact the AUD. However, the hawkish stance of the Reserve Bank of Australia (RBA) and mixed Australian economic data could help balance the downside.
Despite the mixed economic outlook and high inflation in Australia, the RBA’s consistent hawkish position strengthens predictions for future easing measures. The RBA is expected to be the last among G10 central banks to cut interest rates, contrasting with the Federal Reserve’s (Fed) potential easing, which may support AUD/USD in the coming months.
Key Market Movements: RBNZ Decision and China’s Impact on Aussie
- The AUD/USD pair’s decline on Wednesday occurred despite US Dollar losses, influenced by falling copper and iron ore futures. Worsening credit data from China and reduced demand have negatively affected markets.
- RBNZ’s unexpected interest rate cut and consideration of a larger cut dragged down both the Kiwi and the Aussie.
- RBA’s decision to maintain the official cash rate and its cautious view on inflation support the Australian Dollar, with predictions of inflation meeting the target range by late 2026.
Technical Analysis: AUD/USD Outlook
The AUD/USD pair currently shows a moderate bullish sentiment, with key support at 0.6600 and 0.6580, and resistance at 0.6640. Testing these levels will be crucial in determining the pair’s future direction.
Understanding Australian Dollar Trends
Factors influencing the Australian Dollar include interest rates set by the RBA, commodity prices like Iron Ore, the Chinese economy’s health, inflation, and trade balance. The RBA’s policies, along with external factors, play a significant role in shaping the AUD’s value in the global market.