Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Decline as RBA Contemplates Rate Cut

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One Hundred United States Dollars (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate softened by around -0.44%.

In the wake of minutes from the Reserve Bank of Australia’s (RBA) most recent policy meeting which indicated that policymakers were flirting with the idea of cutting the benchmark interest rate, the ‘Aussie’ (AUD) softened versus the majority of its most traded currency rivals. Rapidly declining crude prices also weighed on market sentiment which caused dampened demand for high-yielding assets.

The US Dollar, meanwhile, softened versus many of its most traded currency peers as a result of trader reluctance to invest ahead of the Federal Open Market Committee (FOMC) meeting. Although most traders do not expect the Federal Reserve to change the benchmark rate, there is potential for a change in rhetoric to a more hawkish policy outlook.

The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.7609.

Australian Dollar (AUD) Exchange Rate Softens on RBA

Minutes from the most recent RBA policy meeting indicated that policymakers were willing to cut the benchmark rate further despite pressure in the housing market. This saw the ‘Aussie’ dive versus most of its major peers.

‘In considering whether or not to reduce the cash rate further at this meeting, members saw benefit in allowing some time for the structure of interest rates and the economy to adjust to the earlier change,’ the RBA said in its minutes. ‘They also saw advantages in receiving more data to indicate whether or not the economy was on the previously forecast path.’

The bank concludes with: ‘Taking account of all these factors, members judged it appropriate to hold the cash rate steady for the time being, while recognising that further easing over the period ahead may be appropriate to foster sustainable growth in demand while maintaining inflation consistent with the target.’

The Australian Dollar to US Dollar (AUD/USD) exchange rate has fallen to a low today of 0.7601.

US Dollar (USD) Exchange Rate Dips ahead of FOMC

With the Federal Reserve policy decision fast approaching, the US Dollar softened amid reluctance to invest. Should the Fed continue using tired rhetoric like ‘patience’, the US Dollar is likely to plummet across the board. Mixed data which errs toward negativity also weighed on demand for the ‘Greenback’ (USD).

‘Our view is that the US economy’s actually doing well, definitely the best economy in the world and the unemployment data is at quite low levels,’ said Gavin Goodhand, a senior portfolio manager at fixed income investor. ‘The US Fed is really on the cusp of changing its guidance and then looking to move rates higher. The first thing they’re going to do – and they’ve telegraphed to the market – is remove the word ‘patient’ and I wouldn’t be surprised.’

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Fluctuate

With fluctuations in commodities driving changes for the ‘Aussie’, and with divided opinion as to the hawkishness of Fed policymakers, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to fluctuate over the coming days.

The Australian Dollar to US Dollar (AUID/USD) exchange rate climbed to a high today of 0.7665.

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