The Australian dollar stabilized above $0.615 on Monday, supported by recent economic stimulus measures and strong trade data from China, which improved the outlook for Australia’s largest export market. Investors also reacted to the Melbourne Institute’s Monthly Inflation Gauge, which rose 0.6% in December, a significant acceleration from the 0.2% increase in November. Despite this, the Aussie remained under pressure due to growing expectations of a dovish monetary policy from the Reserve Bank of Australia. Markets are now pricing in a 75% chance of a rate cut next month, a marked increase from 50% earlier in January. The local currency had earlier plunged to a more than four-year low on Friday, as the US dollar surged following stronger-than-expected US jobs data. This shift in sentiment led traders to scale back their expectations for additional Federal Reserve rate cuts in 2025.
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