The Australian dollar falls after soft Chinese and domestic labor data fuel bets the RBA may halt its tightening cycle.
The Australian dollar retreated from a four-year high of 0.726 against the USD after weak Chinese economic data and a jump in domestic unemployment to 4.5% in April. The currency’s decline accelerated as analysts warned the Reserve Bank of Australia’s rate-hiking cycle may be nearing its end, removing a key support.
The RBA has raised rates three times in its last three meetings, contrasting with other G-10 central banks adopting a wait-and-see approach amid inflation and geopolitical risks. While RBA Chief Economist Sarah Hunter signaled hawkish risks, meeting minutes suggested a pause, with an August hike favored over June.
Analysts now question whether the RBA has finished tightening, which could further pressure the AUD. The currency’s pullback follows a sharp rally driven by expectations of sustained rate increases.