The Australian dollar plummeted by 1% to $0.6660 today. The currency hit its lowest level since late December. Australia’s central bank hiked its cash rate by 25 bps to 3.60%. That is the highest raise in more than a decade. However, investors expected such an increase, which didn’t save the Aussie from declining.
The Reserve Bank of Australia took a dovish tone about further rate hikes. The officials hinted that the RBA might be nearing the end of its tightening cycle. That has also contributed to the currency’s downfall. Matt Simpson, the senior market analyst at City Index, noted that the central bank’s statement suggests they are contemplating the end of the rate hikes.
Meanwhile, the U.S. dollar soared on Tuesday. Investors are waiting for Federal Reserve Chair Jerome Powell’s testimony before Congress, hoping for clues about the U.S. economic strength and the Fed’s plans for the rate increases. The dollar gained especially a lot versus the Aussie.
The U.S. dollar index rallied by 0.25% at 104.52 today after tumbling by 0.26% in the previous session. Moreover, the euro dropped by 0.22% to $1.0655. At the same time, the British pound shaved off 0.32%, exchanging hands at $1.19885.
The greenback also added 0.1% versus the Japanese yen to 136.05. Traders are focusing on the final policy meeting for Bank of Japan’s current Governor, Haruhiko Kuroda. It is due on Thursday. Market participants expect the central bank to maintain its ultra-loose monetary policy.
On Tuesday, new data showed Japan’s real wages plummeted the most in almost nine years in January. Inflation that is still four-decade-high weighed on consumer demand.
What about the EM currencies?
Emerging market currencies traded flat against the greenback on Tuesday. Regional stocks also declined due to weak trade data from China. The latter soured the optimistic sentiment.
The Turkish lira traded in a narrow range against the U.S. dollar. Turkish opposition leader Kemal Kilicdaroglu is President Tayyip Erdogan’s main challenger in landmark elections that will take place on May 14.
Meanwhile, the South African rand fell by 0.1% against the U.S. currency. President Cyril Ramaphosa recently appointed a new electricity minister to solve the country’s worst power cuts. He also added his supporters to the cabinet. Investors are waiting for South Africa to report its GDP growth later today. They expect moderate growth in the fourth quarter Y-O-Y.
The Russian rouble remained flat against the greenback today. Low local market activity before a holiday also contributed to the muted trading.
The views and opinions expressed in these articles are those of the source ForexIndustry.com and do not necessarily reflect the official position of ‘Fox on Law,’ which shall not be held liable for any inaccuracies presented. The information provided within this article is for general informational purposes only. While we try to keep the information up-to-date and correct, there are no representations or warranties, express or implied, about the completeness, accuracy, reliability, suitability or availability of the information in this article for any purpose.
This article is syndicated automatically through a third-party agency from ForexIndustry.com.
To view the original article at ForexIndustry.com, you can visit https://www.forexindustry.com/2023/03/07/the-aussie-dollar-plunged-on-tuesday-what-about-the-yen/.
