Today’s News
The Australian dollar remained close to its highest point of 2024 on Tuesday, as traders awaited the Reserve Bank of Australia’s (RBA) decision, with expectations that it will keep interest rates unchanged. Investors are looking for any signs of potential easing in the near future.
Image Source: News.com.au
Meanwhile, the yen stayed steady against the U.S. dollar ahead of a speech by Bank of Japan (BOJ) Governor Kazuo Ueda, which could offer more insights into the pace of future interest rate hikes. Last week, the BOJ left its policy unchanged and indicated no immediate plans for further tightening.
The euro struggled to recover after dropping nearly 0.5% the previous day, as weak business activity surveys pointed to possible rate cuts. In contrast, the British pound hovered near a 2.5-year high, supported by a less dovish stance from the Bank of England compared to the Federal Reserve and European Central Bank.
The Australian dollar slipped 0.1% to USD 0.68305, following a 0.45% rise the previous session, where it reached USD 0.6853—its highest since late December. Although the RBA is expected to hold rates steady, opinions differ on the likelihood of cuts later in the year. A Reuters poll showed only 4 out of 44 economists predicting a reduction by December, while traders are pricing in a 60% chance of a rate cut.
Analysts at Commonwealth Bank of Australia noted that they “expect the RBA’s comments to be hawkish—albeit marginally less hawkish than in August,” which could push the Australian dollar towards USD 0.69, a level not seen since February last year. Any stimulus announcement from China could further boost the Aussie, with People’s Bank of China Governor Pan Gongsheng expected to speak on financial support measures.
The yen edged up to 143.45 per dollar but remained within its September range of 147.20 to 139.58, after easing off a one-year peak reached on September 16. Waning expectations for aggressive tightening by the BOJ, especially after Governor Ueda’s cautious comments last week, have kept the yen in check.
The euro held steady at USD 1.1107 after data showed a sharp contraction in euro zone business activity, while the British pound remained flat at USD 1.33495, following the Bank of England’s decision to hold rates steady last Thursday. Governor Andrew Bailey emphasized the need for caution, stating the central bank must be “careful not to cut too fast or by too much.”
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