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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

AUD falls as RBA holds rate steady at 4.35% as expected

The Australian dollar fell against major currencies after the country’s central bank kept its cash rate unchanged at its final meeting of the year.

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Policymakers reiterated that further tightening would depend upon future data, but noted that progress in bringing inflation back to the target range was slower than previously thought.

(AI Video Transcript)

The Reserve Bank of Australia

The Reserve Bank of Australia (RBA) recently made the decision to keep interest rates at 4.35%, which is the highest it's been in 12 years. Basically, the RBA wants to take a step back and see how previous interest rate increases have affected things like demand for goods, inflation (how much things cost), and the job market. The RBA governor, Michelle Bullock, has been gradually increasing interest rates because she's worried about inflation caused by people spending a lot of money in Australia.

AUD/USD

Because of this news, the AUD has dropped by 0.6% compared to the US dollar (USD). This means that if you were exchanging AUD for USD, you'd get less USD in return. Now everyone is eagerly waiting for the US non-farm payrolls data that's coming out soon. Why is this data so important? Well, it's going to give us a good idea of how well the US economy is doing compared to other countries. It could have a big impact on the value of the USD against other currencies.

In short, the RBA wants to see how their previous decisions on interest rates have affected the economy before changing anything. This has caused the AUD to weaken against the USD. Everyone's attention is now on the upcoming US non-farm payrolls data, which will give us a better understanding of how strong the US economy is.


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