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Australian dollar slides as risk-off sentiment and RBA tone weigh

MUFG said renewed risk-off sentiment tied to an AI-related chip sell-off and uncertainty around Chinese semiconductor progress hit the AUD, even as it remains the best performer year-to-date.

Reported · Written up by our desk · Major Pairs

The Australian dollar weakened as renewed risk-off sentiment pushed G10 trading, with MUFG highlighting the AUD as the worst-performing currency overnight despite still leading for the year.

MUFG linked the pressure to an AI-related chip stock sell-off, along with concerns about Chinese semiconductor advances weighing on the outlook for Australia’s trade and technology exposure.

FXStreet also pointed to comments from Reserve Bank of Australia Governor Bullock, who did not indicate an imminent rate hike, leaving market pricing for one more hike later this year.

The FXStreet market note added that one more factor in broader trading conditions was a cautious market stance ahead of the US Federal Reserve’s two-day policy meeting beginning later Tuesday, which can influence global risk sentiment and US dollar demand.

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