And that continues to see AUD/USD hold lower today by 0.5% at 0.6425, being pressured from China worries. In particular, the poor PMI reading here is one to blame as that is also triggering a bout of yuan weakness and selling in Chinese equities.
AUD/USD daily chart
Going back to the RBA decision, they pretty much kicked the can down the road once again. The forward guidance is left unchanged but traders are not seeing any more rate hikes still for the central bank.
It all comes down to the data now and if the recent developments stay the course, it will be a case of sooner rather than later that we talk about rate cuts potentially.
As for AUD/USD, the pair is pressured lower after being rejected at 0.6500 last week but there is still some short-term support around 0.6380 before sellers can secure another firm break lower towards 0.6200 next.
Even as the RBA pauses alongside the Fed and with the cash rate being at the highest in 11 years, the rate differentials continue to favour the US dollar and that still counts for something. So, unless Treasury yields are to fall further and/or the Fed has to cut rates faster than anticipated, it’s tough to imagine a material rebound in AUD/USD unless risk sentiment also picks up – which is unlikely, as China worries continue to fester