The AUD/USD price dropped slightly in the overnight session as investors reacted to the Federal Reserve statement.
It was trading at 0.6350, which was its lowest level since October 25. This price is a few pips below last week’s high of 0.6520.The AUD/USD remained in a tight range after the Fed and the Reserve Bank of Australia published its monetary policy decision. On Tuesday, the Fed continued with its smaller rate hikes as it raised rates by 0.25%. It hinted that it will continue hiking rates in the coming months as it fights the soaring inflation.
RBA’s rate decision was followed by another aggressive rate hike by the Federal Reserve. In line with expectations, the Fed hiked rates by 75 basis points for the fourth straight meeting.In its statement, the Fed said that it will continue rising interest rates albeit at a slower pace in a bid to fight the elevated inflation. According to Jerome Powell, the Fed will be data-dependent when it comes to rate hikes.
Like other central banks, the Fed is fighting against the elevated inflation rate. Data published in October showed that the country’sThe Fed will watch this week’s non-farm payrolls data that come on Friday. Economists expect the data to show that the economy added more than 250k jobs in October. The unemployment rate is expected to have remained at the 50-year low.
The AUD/USD pair will also react to next week’s inflation data. A sign that America’s inflation is slowing will pressure the Fed to start pivoting its policies. Analysts expect that the Fed will now hike by 50 basis points in December.The AUD/USD pair pulled back slightly after the Fed decision and Powell’s press conference.
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