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AUD/USD sheds 10 pips after RBA’s Lowe hints at more rate cuts

  • AUD/USD has barely moved in response dovish comments by RBA’s Lowe.
  • Markets are  fully priced for two RBA rate cuts before the year-end.

AUD/USD is currently trading largely unchanged on the day at 0.6890, having hit a high of 0.6907 earlier today on the back of broad-based US Dollar sell-off.

The pair began losing altitude at 01:10 GMT and fell by 10 pips to 0.8883 in the last few minutes, courtesy of Reserve Bank of Australia Governor Lowe’s dovish talk.

The central chief said it is not unrealistic to expect a further reduction in interest rates as there is considerable spare capacity in the labor market despite strong jobs growth. Lowe also stressed the need for a fiscal boost and structural reforms.

Lowe’s comments have come two days after the RBA’s June meeting minute confirmed further rate cuts. The central bank reduced rates by 25 basis points to a new record low of 1.25% earlier this month and the markets are fully priced in for two more rate cuts before the year-end.

As a result, Lowe’s take on interest rates is hardly a surprise for the markets. Therefore, the AUD may move back to session highs above 0.69, especially if Treasury yields continue to slide. As of writing, the 10-year US yield is seen at 2 percent, the lowest level since 2016.

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