Societe Generale cites the Reserve Bank of Australia’s removal of a projected rate hike as capping AUD upside against the USD.
The Australian Dollar faces downward pressure after the Reserve Bank of Australia held its cash rate at 4.35% and reduced its projected rate hike path. The RBA now expects the policy rate to average around 4.40%, down from earlier forecasts.
Prior to the decision, markets had priced in a higher terminal rate, with consensus anticipating at least one additional hike in 2024. The shift follows recent inflation data that fell short of expectations, easing pressure on the central bank to tighten further.
Analysts note the policy divergence with the U.S. Federal Reserve, which remains cautious on rate cuts, continues to support the USD against the AUD.