Forex News: Australian Dollar Falls Amid Lower RBA Rate Hike

Australian Dollar Falls Amid Lower RBA Rate Hike Expectations

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Wednesday, as the investor sentiment dampened after the Reserve Bank of Australia (RBA) is less likely to boost interest rates in June.

Asian stock markets traded lower, as continuing uncertainty about the fragile ceasefire in the Middle East conflict and the related surge in crude oil prices is weighing on market sentiment. The U.S. launched fresh strikes on Iran, with US President Donald Trump accusing Tehran of downing a helicopter in the Strait of Hormuz.

The U.S. military has launched fresh strikes against Iran in a very strong, powerful response to the downing of a U.S. Army Apache helicopter off the Oman coast. It was said that U.S. fighter jets struck Iranian air defense systems and radar sites near the Strait of Hormuz.

Iran also launched missiles and drones toward U.S. targets in the region and warned that "heavier and broader" attacks would follow if the United States continued aggression against Iran.

Crude oil prices plunged after Israel and Iran halted their exchange of attacks. West Texas Intermediate crude for July delivery was down $3.11 or 3.41 percent at $88.19 per barrel.

In economic news, data from the National Bureau of Statistics showed that China's consumer prices logged a steady growth in May and producer price inflation accelerated to its highest level in nearly four years on higher energy costs. Consumer prices increased 1.2 percent year-on-year in May, the same rate as seen in April. This was slightly weaker than forecast of 1.3 percent.

Core inflation that excludes food and energy slowed to 1.1 percent from 1.2 percent in the previous month.

Food prices dropped 1.7 percent in May as pork prices plunged 16.1 percent from the last year. However, higher energy prices offset the decline in food prices.

On a monthly basis, consumer prices dropped 0.1 percent in May. Economists had forecast a monthly fall of 0.2 percent.

Producer prices advanced 3.9 percent on a yearly basis in May after climbing 2.8 percent in April, the NBS said in a separate communique. The rate came in line with expectations and also marked the fastest since mid-2022.

In the Asian trading today, the Australian dollar fell to nearly a 2-month low of 1.6473 against the euro and nearly a 3-week low of 0.9777 against the Canadian dollar, from yesterday's closing quotes of 1.6422 and 0.9801, respectively. If the aussie extends its downtrend, it is likely to find support around 1.68 against the euro and 0.96 against the loonie.

Against the U.S. and the New Zealand dollars, the aussie dropped to 0.7009 and 1.2061 from Tuesday's closing quotes of 0.7024 and 1.2093, respectively. The aussie may test support near 0.69 against the greenback and 1.96 against the kiwi.

The aussie edged down to 112.40 against the yen, from yesterday's closing value of 112.66. On the downside, 110.00 is seen as the next support level for the aussie.

Looking ahead, U.S. MBA weekly mortgage approvals data, U.S. CPI data for May and U.S. EIA weekly crude oil data are slated for release in the New York session.

At 9:45 am ET, the Bank of Canada is set to announce its monetary policy decision. The central bank is likely to keep its interest rate unchanged at 2.25 percent.

After 45 minutes later, the Bank of Canada governor Tiff Macklem is scheduled to conduct press conference about the monetary policy decision.

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