- The pair's descent on Wednesday came despite further US Dollar losses, as a result of falling copper and iron ore futures. Worsening credit data from China, coupled with the country's weakened demand and substantial commodity supply, has negatively impacted markets.
- In addition, the RBNZ unexpectedly cut interest rates by 25 basis points this morning and also revealed that a 50-basis-point cut had been seriously considered, which dragged down both the Kiwi and the Aussie.
- However, investor confidence in the Australian Dollar was recently bolstered by the RBA's decision to maintain the official cash rate (OCR) at 4.35%. Its cautious view, along with predictions of sustained domestic inflation, suggests that both trimmed-mean and headline CPI inflation are now expected to meet the mid-point of the 2-3% range by late 2026, later than the earlier prediction of June 2026.
- In that sense, among the G10 central banks, RBA is anticipated to be the last to initiate interest rate cuts. In contrast, the Federal Reserve (Fed) is expected to facilitate easing in the near future, and this contrast may support AUD/USD in the coming months.
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