**AUD/USD Steadies as RBA Rate Cut Bets Fade and Fed Decision Approaches**
*By Anil Panchal, expanded and revised with additional context from FXStreet and market data sources*
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### Overview
The Australian dollar (AUD) maintained a steady position against the US dollar (USD) in recent trading sessions. As expectations for imminent rate cuts by the Reserve Bank of Australia (RBA) recede, market participants are shifting their focus to the forthcoming monetary policy decision by the US Federal Reserve (Fed). The dynamics between the two central banks’ outlooks, shifting risk sentiment, and recent economic data releases are driving trends in the AUD/USD currency pair.
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### AUD/USD Recap
– **Current Levels:** The AUD/USD pair stabilized near the 0.6370 mark in the European Monday session, following a rebound from recent lows seen last Friday.
– **Short-term Movement:** After trading as low as 0.6337, the currency pair found support, recovering alongside improvements in market sentiment and diminishing expectations for RBA rate cuts.
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### Reserve Bank of Australia: Pivotal Factors
#### Fading Expectations for RBA Easing
– **Economic Resilience:** Robust Domestic data, such as strong Australian Q3 inflation figures, have contributed to recalibrating market bets surrounding the RBA’s policy trajectory.
– **Australian Q3 Headline CPI:** Came in at 1.2 percent quarterly and 5.4 percent annually, above expectations, indicating lingering inflationary pressures.
– **Trimmed Mean CPI:** The RBA’s preferred inflation measure also exceeded projections, maintaining its status well above the central bank’s target band.
– **RBA Governor Michele Bullock’s Recent Commentary:**
– Reiterated concerns about persistent inflation.
– Signaled willingness to act if inflation risks build, but emphasized a data-dependent approach.
– Diminished the probability of policy loosening in the near term.
– **Market Reaction:**
– Swaps and futures now price in lower odds for a rate cut at upcoming meetings.
– Goldman Sachs and ANZ have adjusted forecasts, anticipating the RBA will hold rates steady for longer than previously assumed.
#### RBA Policy Context
– **Interest Rate Status:** The cash rate remains at 4.10 percent after having been raised multiple times during the current tightening cycle.
– **Growth vs. Inflation Dilemma:** The central bank balances the drag of higher rates on household borrowing and spending against ongoing inflation, especially in housing, utilities, and services.
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### US Federal Reserve: FOMC Decision in Focus
#### Fed Policy Outlook
– **Upcoming FOMC Meeting:** The Federal Open Market Committee will announce its monetary policy decision this Wednesday.
– **Market Expectations:**
– No immediate rate change is forecast, keeping the Federal funds rate steady at 5.25-5.50 percent.
– Futures pricing suggests the hiking cycle may be complete
Read more on AUD/USD trading.