Australian Dollar Outlook: Currency Markets Rocked by Fed Decision
After the Fed raised rates, the Australian Dollar fell. The RBA has hinted at less aggressive monetary policy principles. The USD now has some heft thanks to the Fed’s massive boost. Will the AUD/USD exchange rate decline?
The Australian Dollar now seems to be a victim of US Dollar manipulation.
Treasury rates have shot up as a result of the Fed’s decision earlier in the week. The US Dollar index (DXY) increased to a 20-year high as a result, strengthening the US Dollar globally.
As expected throughout the week, the US central bank increased its Fed funds target rate by 75 basis points, but it was the press conference after the decision that made the hawks scream.
In regard to the battle against the astronomically high inflation rate (8.3% year-over-year as of the end of August), Fed Chair Jerome Powell stated, “We will remain at it until the job is done.” By the end of the year, the market has already factored in an additional 125 basis points of increases.
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