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Australian dollar slips as RBA keeps rates unchanged
The RBA flagged that the Middle East conflict has hurt inflation less than expected and said inflation will not return to the target midpoint until late 2027.
The Australian dollar weakened versus the US dollar after the Reserve Bank of Australia kept its Official Cash Rate unchanged for the second straight meeting at the end of its August policy session, with AUD/USD sliding below the mid-0.7000s, according to FXStreet.
In its policy statement, the RBA said the impact of the Middle East conflict on inflation has, so far, been less than expected, a message that disappointed some Aussie bulls. The central bank also said inflation is not expected to return to around the midpoint of the target range until late 2027, while noting upside risks to that projection.
The RBA added that it will continue taking whatever action is necessary to bring inflation back to target, including increasing the cash rate target further, which held back traders from placing bullish bets on the Australian dollar. FXStreet also pointed to a modest US dollar uptick as additional pressure on the pair.
Traders appeared cautious ahead of upcoming US inflation data, with the CPI and PPI scheduled for Wednesday and Thursday, respectively. FXStreet noted AUD/USD is trading between the 100-day and 200-day moving averages, with the 100-day SMA at 0.7053 acting as resistance and the 200-day SMA at 0.6928 serving as support.