AUD/USD falls after the RBA’s unexpected decision to slow its monetary policy tightening
The Australian dollar continues to fall against the dollar, punished by the solid US jobs report and the RBA’s decision to slow the pace of monetary tightening. AUD/USD even recently broke its September low at around $0.64, while other major currency pairs manage to hold on.
The Australian dollar has underperformed other major currencies since last week following the RBA’s surprise decision to raise interest rates by just 25 basis points, down from 50 basis points in the previous four meetings. The committee justified the decision with time to assess the impact of the numerous rate hikes since the beginning of the year on the economy, but officials indicated they would continue to raise them.
Specifically, the Australian dollar’s underperformance since the RBA’s unexpected decision can be explained by the spread of the country’s bond yields with the other regions of the world. The RBA will need to accelerate its monetary tightening to hope to see the Australian dollar outperform the other major currencies. However, an outperformance against the dollar seems unlikely even if the RBA accelerates its tightening as the US dollar takes advantage of its safe haven aspect in this highly uncertain economic and geopolitical context.
AUD/USD Weekly Price Chart – Key Levels