The Australian dollar slumped today, erasing yesterday’s gains, after Philip Lowe, Reserve Bank of Australia Governor, mentioned in his speech that an interest rate cut is as likely as a hike.
Previously, the RBA was saying that the next move in rates is more likely to be a hike, and yesterday’s monetary policy statement seemed to confirm this. Yet today, Governor Lowe contradicted that in his speech titled “The Year Ahead,” saying:
Looking forward, there are scenarios where the next move in the cash rate is up and other scenarios where it is down. Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced.
AUD/USD plunged from 0.7232 to 0.7131 as of 11:51 GMT today. EUR/AUD jumped from 1.5756 to 1.5962.
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