- The Australian Dollar weakened as the Reserve Bank of Australia (RBA) hinted at the possibility of rate cuts starting in February.
- According to the RBA’s Meeting Minutes, the board expressed increased confidence in managing inflation, although risks remained.
- Meanwhile, the US Dollar strengthened as Federal Reserve officials indicated fewer rate cuts in 2025, citing a slowdown in the disinflation process.
The Australian Dollar (AUD) declined for the second consecutive day against the US Dollar (USD) on Tuesday, following the release of the Reserve Bank of Australia’s (RBA) Meeting Minutes for its December monetary policy. Trading is expected to remain quiet as the Christmas holiday approaches.
The RBA’s Meeting Minutes revealed that the board had become more confident in its inflation outlook since the previous meeting, although risks remained. The board emphasized the importance of keeping monetary policy “sufficiently restrictive” until inflation shows more clarity.
The RBA also noted that if upcoming data meets or falls short of expectations, it would strengthen confidence in controlling inflation and could make it appropriate to begin easing policy. However, stronger-than-expected data might require extending the restrictive policy for a longer period.
RBA Governor Michele Bullock pointed to the persistent strength of the labor market as a key factor behind the RBA’s slower pace in initiating its monetary easing cycle compared to other countries.
The Australian Dollar declines as traders anticipate fewer Federal Reserve rate cuts in the coming year
- The US Dollar rebounded following a sharp sell-off as Federal Reserve (Fed) policymakers signaled fewer interest rate cuts next year due to a slowdown in the disinflation process. However, soft US PCE data have tempered inflation concerns, presenting a mixed outlook for the economy.
- According to the CME FedWatch tool, markets now anticipate a nearly 93% probability that the Federal Reserve (Fed) will keep interest rates unchanged in January, maintaining the current range of 4.25%–4.50%.
- US Durable Goods Orders for November came in weaker than expected, with fresh orders declining by 1.1%, compared to the projected 0.4% drop. This follows an upwardly revised increase of 0.8% in October, up from the initially reported 0.2%.
- The US Consumer Confidence Index, published by the Conference Board, fell by 8.1 points in December, landing at 104.7. “The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” noted Dana M. Peterson, Chief Economist at The Conference Board.
- US households expressed concerns about President-elect Trump’s economic policies, with nearly half of respondents fearing that tariffs could drive up the cost of living. These concerns were compounded by the Federal Open Market Committee’s (FOMC) recent projections, which indicated fewer rate cuts in 2025, reflecting caution amid persistent inflationary pressures.
- On Friday, Cleveland Fed President Beth Hammack said that she prefers to hold interest rates steady “until the Fed gets further evidence that inflation is resuming its path to its 2% objective,” per Reuters.
- Chicago Fed President Austan Goolsbee stated in an interview with CNBC that uncertainty surrounding Trump’s policies after taking office led him to revise his projection for 2025. While he had previously anticipated a 100-basis-point (bps) interest rate reduction, he now expects fewer cuts.
- US core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8%, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against forecasts of 0.2% and the prior release of 0.3%.
The Australian Dollar stays below the 0.6250 level, with the RSI indicating potential risks to the ongoing upward correction
The AUD/USD is trading around 0.6230 on Tuesday, with the daily chart showing a continued bearish trend as the pair remains within a descending channel. The 14-day Relative Strength Index (RSI) falls below the 30 level, indicating that the potential for a near-term upward correction may be fading.
On the downside, the pair could test the lower boundary of the descending channel near the 0.6110 support level.
To the upside, the AUD/USD faces initial resistance at the nine-day Exponential Moving Average (EMA) at 0.6288, followed by the 14-day EMA at 0.6322. A more substantial resistance level lies at the upper boundary of the descending channel around 0.6370. A breakout above this channel could pave the way for a rally toward the nine-week high of 0.6687.
AUD/USD: Daily Chart
Australian Dollar Today Price
The table below displays the percentage change of the Australian Dollar (AUD) against major currencies today. The Australian Dollar showed the weakest performance against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.00% | -0.09% | 0.10% | 0.17% | 0.07% | 0.02% | |
| EUR | -0.09% | -0.09% | -0.18% | 0.00% | 0.08% | -0.02% | -0.07% | |
| GBP | -0.00% | 0.09% | -0.10% | 0.10% | 0.17% | 0.07% | 0.01% | |
| JPY | 0.09% | 0.18% | 0.10% | 0.21% | 0.31% | 0.17% | 0.15% | |
| CAD | -0.10% | -0.01% | -0.10% | -0.21% | 0.07% | -0.03% | -0.08% | |
| AUD | -0.17% | -0.08% | -0.17% | -0.31% | -0.07% | -0.10% | -0.14% | |
| NZD | -0.07% | 0.02% | -0.07% | -0.17% | 0.03% | 0.10% | -0.05% | |
| CHF | -0.02% | 0.07% | -0.01% | -0.15% | 0.08% | 0.14% | 0.05% |
