The Australian dollar has stopped falling against the US dollar for now. The current AUD/USD exchange rate is 0.6438.
The Aussie suffered a sharp drop of about 0.8% in a single day, which was the biggest intraday loss in a month.
This was caused by the market’s reaction to the outcome of the Reserve Bank of Australia’s meeting. The RBA increased the interest rate to 4.35% per year, the highest level in 12 years, ending a four-month period of stable monetary policy. However, the regulator also adopted a softer tone in its statement, saying that future decisions would depend on the incoming data.
The next RBA meeting will take place in December. The market expects that the rate will stay the same.
The RBA also changed the wording of the final paragraph of its statement. This could suggest that the monetary authorities do not see the need for further rate hikes as a tool. However, they are ready to act if the situation changes.
The Aussie’s high sensitivity to the RBA’s decision is due to the sudden change in sentiment.