FX.co ★ Australian Dollar Weakens Ahead of RBA Decision

The Australian dollar weakened to approximately $0.64 on Tuesday, relinquishing some gains from the previous day, as investors anticipated the Reserve Bank of Australia's policy announcement. The central bank is broadly expected to reduce the official cash rate by 25 basis points to 3.85%. As this move is largely anticipated by the market, traders are now focusing on the Reserve Bank's revised economic forecasts and Governor Bullock's comments to gain insight into the future trajectory of interest rates. This development follows recent Australian economic data that has cast doubt on market expectations for additional rate cuts this year. Concurrently, domestic political uncertainty exerted further pressure on the currency, following the fracturing of Australia's opposition coalition when the National Party rescinded its support. Furthermore, recent rate reductions by the People's Bank of China have impacted the Australian dollar, given its sensitivity to Chinese economic developments and its function as a liquid stand-in for the yuan.