Cooling Australian inflation and dovish RBA expectations push AUD 0.25% lower against USD near 0.6890.
The Australian Dollar (AUD) fell 0.25% to 0.6890 against the US Dollar (USD) in European trading on Friday, underperforming major peers. Markets are pricing in potential Reserve Bank of Australia (RBA) rate cuts amid cooling inflation, with May’s headline CPI easing to 4.0% YoY from April’s 4.2%.
The decline follows softer global inflation expectations, driven by oil prices retreating to pre-Middle East war levels. Meanwhile, the USD weakened slightly as traders reassessed hawkish Federal Reserve bets for 2024, though rate cut expectations for the RBA extend into late 2027.
The AUD was the weakest against the Swiss Franc, reflecting broader risk aversion. The 20-day EMA’s downward slope suggests further downside pressure for the currency pair.