Aussie Falters on RBA’s Dovish Tone; Markets Brace for US Economic Indicators

 

The Australian Dollar (AUD) remained under pressure on Tuesday morning following the Reserve Bank of Australia's (RBA) monetary policy decision. The European economic calendar lacks significant data releases for the day, but attention will shift later to the US for third-quarter Unit Labor Costs and Nonfarm Productivity figures.

As anticipated, the RBA kept the Official Cash Rate (OCR) unchanged at 4.35% during its December meeting. In its policy statement, the RBA noted growing confidence that inflation pressures were easing but cautioned that risks remained. Speaking at the post-meeting press conference, RBA Governor Michele Bullock highlighted that while upside risks to inflation had diminished, they had not been entirely eliminated. The AUD/USD pair faced selling pressure, dropping over 0.5% on the day to trade near 0.6400.

In China, November's trade data revealed a widened trade surplus of $97.44 billion, up from $95.27 billion in October. Year-on-year, exports rose by 6.7%, while imports declined by 3.9%. Chinese President Xi Jinping expressed strong confidence in achieving the country's economic targets for the year.

The US Dollar (USD) Index edged higher during Monday's US trading session, supported by a cautious market sentiment, and maintained its position slightly above 106.00 on Tuesday morning. Meanwhile, the 10-year US Treasury bond yield remained below 4.2%, and US stock futures traded flat.

In currency movements:

• EUR/USD posted modest losses on Monday but held above 1.0550 during Tuesday’s European session. Germany's data confirmed a 2.2% annual increase in the Consumer Price Index for November.
• GBP/USD briefly approached 1.2800 before consolidating near 1.2750 on Tuesday after closing flat the previous day.
• USD/JPY gained nearly 0.8% on Monday and continued to trade above 151.00 on Tuesday morning.

Gold gained momentum on hopes of Chinese economic stimulus, climbing approximately 1% on Monday. XAU/USD extended its rally early Tuesday, trading near $2,670.

 

 

 

 

 

 

 

Paraphrasing text from "FXSTREET" all rights reserved by the original author.