Australian Dollar underperforms as RBA rate hike fears wane

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The Australian Dollar faces pressure against its risky currency peers as market experts see the RBA’s next policy move on the downside.
Analysts at NAB said that the Australian economy has lost momentum.
US-Iran early deal hopes have lifted market sentiment.

The Australian Dollar (AUD) trades lower against its major currency peers during the European trading session on Tuesday. The Aussie Dollar is up 0.15% against the US Dollar (USD) as the market sentiment turns risk-on. However, it is underperforming its risky currency peers amid hopes that the next move by the Reserve Bank of Australia (RBA) on interest rates will be a “cut” rather than a hike.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.28%	-0.43%	0.00%	-0.14%	-0.18%	-0.52%	-0.23%
EUR	0.28%		-0.12%	0.32%	0.14%	0.16%	-0.21%	0.08%
GBP	0.43%	0.12%		0.43%	0.28%	0.24%	-0.08%	0.20%
JPY	0.00%	-0.32%	-0.43%		-0.13%	-0.16%	-0.50%	-0.21%
CAD	0.14%	-0.14%	-0.28%	0.13%		-0.03%	-0.36%	-0.08%
AUD	0.18%	-0.16%	-0.24%	0.16%	0.03%		-0.33%	-0.05%
NZD	0.52%	0.21%	0.08%	0.50%	0.36%	0.33%		0.28%
CHF	0.23%	-0.08%	-0.20%	0.21%	0.08%	0.05%	-0.28%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Analysts at National Australia Bank (NAB) have scrapped their previous forecast of a hike by the RBA in the August policy meeting, and now expect it to lower its interest rate, citing that the economy has lost momentum. However, the NAB has not provided any timeframe for the cut.

Australian economic concerns have stemmed from weak employment and soft Consumer Price Index (CPI) data for April. The Australian Bureau of Statistics reported last month that inflationary pressures cooled down to 4.2% Year-on-Year (YoY) in April from 4.6% in March. On the labor market front, employers laid off 18.6K payrolls in April, while they were anticipated to add 17.5K fresh workers.

Analysts at Commonwealth Bank of Australia (CBA) have predicted that the RBA will hold its Official Cash Rate (OCR) steady at 4.35 by the year-end and deliver cuts in May and August next year.

For more cues on the Australian interest rate outlook, investors will focus on the policy meeting next week, in which the RBA is expected to leave interest rates steady at 4.35%.

Meanwhile, the market sentiment has turned favorable for riskier assets on hopes that the United States (US) and Iran will reach a deal soon. These hopes have intensified following comments from US President Donald Trump that negotiations with Iran are in “final throes” and the Strait of Hormuz could open up in “two or three days” if an agreement with Tehran is secured, The Guardian reported.

As of writing, S&P 500 futures are up almost 0.5% to near 7,450, reflecting risk-on market sentiment. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.23% lower to near 99.75.

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