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Australian dollar edges higher near 0.6960 amid hawkish Fed pause
Fed officials dissented against the decision to keep rates at 3.5% to 3.75% in July, adding hawkish support for the US dollar and creating downside pressure for AUD/USD.
FXStreet reports AUD/USD inched higher after two sessions of losses, trading around 0.6960 during Asian hours on Thursday.
The article links the modest gains in the Australian dollar to positioning, while warning that the US dollar could strengthen after a “hawkish” Federal Reserve hold. Although the Fed kept rates steady in the 3.5% to 3.75% range at its July policy meeting, the decision signaled hawkish sentiment, with Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack, and Minneapolis Fed chief Neel Kashkari all dissenting and advocating a 25 basis point hike.
At a post-meeting press conference, Fed Chairman Kevin Warsh said the central bank will not provide forward guidance on future rate paths but remains committed to achieving its 2% inflation target. The piece says Warsh’s tone was more forceful than baseline expectations, highlighting repeated emphasis that inflation cannot be solved quickly.
Meanwhile, FXStreet notes headwinds for the Australian dollar, pointing to Australia’s 10-year government bond yield pulling back toward 4.9% following weaker inflation data. It cites headline inflation slowing to a four-month low of 3.8% in June, below May and market forecasts of 4.0%.