AUD/USD plummeted to a weekly low of 0.7470 after the monetary policy decision by the Reserve Bank of Australia (RBA).

RBA ends the 2024 April bond target of 0.1% and kept the OCR unchanged at 0.10% amid the rising inflation concerns. RBA stated that the OCR will not be hiked until inflation is under control in the 2-3% target range.

Governor Phillip Lowe said, “Inflation has picked up, but in underlying terms is still low, at 2.1 percent”.
He added that “Further, but only gradual, pick-up in underlying inflation is expected”.

AUD dropped against USD ahead of the Fed policy meeting. The conflicting policy standpoints between the RBA and the Fed put more pressure on the pair on the downside.

The dollar index remains near 93.90 as investors look to position their USD trades before the commencement of the all-important Federal Reserve policy meeting. Asset tapering announcement is expected in the November meeting. Interest rate hikes are anticipated as part of the plan to counter the rising inflationary risks.