Australian Dollar Falls Amid RBA Rate Cut Speculation

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Wednesday, as traders expect two or more rate cuts if inflation continues to decline as anticipated. Earlier this month, the Reserve Bank of Australia (RBA) lowered its cash rate to 3.60 percent from 3.85 percent, as widely expected.

The AUD also remain lower after the People's Bank of China (PBOC) interest rate decision.

The PBoC maintained its interest rates, as Beijing focus more on fiscal policy easing and targeted measures. The central bank left its one-year loan prime rate at 3.0 percent. Similarly, the five-year LPR, the benchmark for mortgage rates, was retained at 3.50 percent.

The bank had reduced its both LPRs by quarter points in October 2024 and 10 basis points each in May.

On the geopolitical front, U.S. President Donald Trump warned that Russia's Vladimir Putin could face a "rough situation" if he does not show a willingness to work toward a peace settlement with Kyiv.

He also urged Ukrainian leader Volodymyr Zelensky to be ready to "show some flexibility" in negotiations.

In economic releases, traders look ahead to the release of the Fed minutes later in the day ahead of a key speech from Federal Reserve Chair Jerome Powell later this week.

Powell's speech on Friday morning at the Jackson Hole Symposium, an annual gathering of the world's central bankers, may indicate whether the Fed will cut its benchmark rate at the September policy meeting.

Crude oil prices declined amid supply side concerns as OPEC continues to unwind 2.2 million barrels per day in voluntary cuts by its member nations. West Texas Intermediate crude for September delivery was down $1.07 or 1.69 percent at $62.35 per barrel.

In the Asian trading today, the Australian dollar fell to near 1-1/2-month lows of 94.87 against the yen and 1.8081 against the euro, from yesterday's closing quotes of 95.34 and 1.8038, respectively. If the aussie extends its downtrend, it is likely to find support around 93.00 against the yen and 1.82 against the euro.

Against the U.S. and the Canadian dollars, the aussie slipped to nearly a 3-week low of 0.6429 and a 2-week low of 0.8925 from Tuesday's closing quotes of 0.6454 and 0.8949, respectively. The aussie may test support near 0.62 against the greenback and 0.87 against the loonie.

Looking ahead, Eurozone CPI data for July is due to be released at 5:00 am ET in the European session.

In the New York session, U.S. MBA mortgage approvals data, Canada new housing price index for July and U.S. EIA crude oil data are due to be released.