The big surprise today wasn’t that the RBA cut rates but that they discussed going with a 50 basis point move. That has the market nearly fully priced for cuts at the next three meetings.
In turn, the Australian dollar slumped and is the G10 laggard today.
Despite that, the market has been taking a constructive view of rate cuts at the moment. They soften some of the risks around a hard landing and domestic weakness. With that, AUD/USD was able to find support just below 0.6400 and has bounced 25 pips.
AUD/USD hourly
From here, AUD will take its cues from the risk trade. That’s been a big tailwind since Trump backtracked on tariffs but it hasn’t led to any kind of sustained Australian dollar rally.
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