AUD/USD climbs about a tenth of a percent into the 0.6440s on Thursday, continuing the correction of the steep sell-off in the pair at the start of April.
AUD/USD recovers marginally after the recent steep sell-off. Both the Fed and RBA are expected to delay cutting interest rates now. This means the interest rate differential, a key driver of FX, is unlikely to widen as much as in other pairs. As can be seen from the chart below, an overall bearish tone dominates price action after the new year-to-date low made on Tuesday at 0.6389.
In Australia, a similar delay means the Reserve Bank of Australia is now not expected to lower the 4.35% overnight cash rate until November 2024. “Markets currently price the RBA cash rate to be unchanged at the next meeting on 7 May, with a 60% chance of a cut by November,” said Westpac in a recent note. There has been a surprising down shift in the number of cuts the RBA is expected to make in 2024 over the past month, which mirrors what has happened in the US with the Fed.
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