The Australian Dollar fell versus the US Dollar overnight as global risk appetite deteriorated. The risk-off move accelerated as Wall Street traders came back from an extended weekend in the US, with the Dow Jones Industrial Average (DJIA) closing 0.76% lower. AUD/USD’s decline started during Monday’s APAC session when the Reserve Bank of Australia (RBA) rate decision crossed the wires.
The RBA kept its benchmark interest rate at 0.1%, in line with economists’ forecasts. However, the central bank did move to continue asset purchases at the pace of A$4 billion per week until mid-February. Some expected a suspension of tapering plans. The previous balance sheet agenda called for a review in November, but because of the Covid lockdowns across Victoria and New South Wales (NSW), the decision was pushed back, according to the RBA statement. This offers a supportive policy stance while continuing to push toward its ultimate goal of raising rates in 2024.
