Australian dollar awaits RBA decision

Financial and commodity markets analytics

The Australian dollar is trading lower today after expectations heightened of a rise in interest rates by the US Federal Reserve next month.

At 11.12am (GMT) the Aussie dollar was trading at US71.32c down from US71.68c at close of trade on Friday.

Over the weekend US central bankers urged the US Fed to stick to their plan and raise interest rates in September despite the uncertainty around the Chinese economy.

Speaking at the Jackson Hole summit, US Fed number two Stanley Fischer also retreated that although inflation may be a sticking point in lifting rates the issue will sort itself out over time and the Fed will be able to move forward.

“There is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further,” he said. “While some effects of the rise in the dollar may be spread over time, some of the effects on inflation are likely already starting to fade.” He said.

The Australian dollar is expected to come under pressure in the next 24 hours as the market awaits the latest interest rate decision and momentary policy statement from the Reserve Bank of Australia.

No changes in rates are predicted but some fear the RBA may plan for future cuts over worries that the problems in China will spill over to the Australian economy.


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