AUD/USD Plummets to 0.6660 as Risk Sentiment Weakens
The AUD/USD pair continues its downward trajectory for the sixth consecutive trading day, hitting near 0.6660. This decline is attributed to a cautious market sentiment that is impacting Asia-Pacific currencies and equities, primarily due to two factors:
- US Political Uncertainty: The nomination of US Vice President Kamala Harris for the Democratic ticket has intensified concerns about the upcoming presidential elections. This uncertainty has led to a risk-off sentiment among investors.
- China's Surprise Rate Cut: The People's Bank of China's (PBoC) unexpected decision to cut its one-year and five-year Loan Prime Rate (LPR) has raised worries about China's economic outlook. This move aims to stimulate domestic demand but has added to market apprehension.
Despite these factors, there is growing speculation that the Reserve Bank of Australia (RBA) might raise interest rates further this year due to persistent inflationary pressures. This could potentially provide some support for the AUD.
Meanwhile, the US Dollar (USD) has weakened slightly due to the heightened political uncertainty. However, a slew of upcoming US economic data, including Q2 GDP and June PCE, could offer insights into the Federal Reserve's (Fed) timeline for reducing interest rates.