The Australian dollar recovers slightly from multi-year lows after a sharp sell-off triggered by the Fed's hawkish stance. Investors anticipate early rate cuts by the RBA, weighing on the AUD.
The Aussie dollar has rebounded slightly after a sharp decline on Wednesday but continues to trend downward. A hawkish stance by the Federal Reserve fueled risk aversion and pushed the Aussie to its lowest point in two years on Wednesday. Investors anticipate the RBA cutting rates sooner than expected, which is putting pressure on the AUD . The Australian dollar is showing minor gains on Thursday, recovering from multi-year lows at 0.
6200, following a significant sell-off after the Fed's monetary policy decision on Wednesday. The US central bank lowered interest rates by 25 basis points to 4.25%, as predicted, but signaled a slower pace of monetary easing next year. This fueled risk aversion and caused the Aussie to drop. US inflation and GDP growth expectations for next year have been revised upward, while unemployment is projected to increase at a slower rate. Overall, this suggests the bank will take a long break before further rate cuts. In Australia, consumer inflation expectations rose to 4.2%, up from 3.8% in November. However, the Aussie remains vulnerable as the market expects a worsening economic scenario that will force the RBA to cut rates ahead of schedule. The table below shows the percentage change of the Australian dollar (AUD) against major currencies this week. The Australian dollar performed the best against the Japanese yen. The heat map displays percentage changes of major currencies against each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row
AUD Australian Dollar Federal Reserve Rate Cuts Risk Aversion
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