Currency market update: USD rebounds, Aussie declines after RBA holds rates
Shafaq News / Amidst market movements, the USD saw a resurgence, nearing a one-week high against various currencies. Conversely, the Australian dollar depreciated following the Reserve Bank of Australia's decision to maintain interest rates at 4.35%, as anticipated. This decision impacted the Antipodean currency, distancing it from its recent high of $0.6690, achieved during the USD's recent downtrend.
Matt Simpson, Senior Market Analyst at City Index, highlighted the Australian dollar's potential overvaluation, indicating a likelihood of profit-taking post-RBA announcement. The Aussie's decline also influenced a slight dip in the New Zealand dollar, currently at $0.6152.
Elsewhere, the USD remained stable, keeping the euro near a three-week low. Sterling held steady, while the dollar index maintained a more than one-week high at 103.61, signaling a partial correction from its significant November decline.
Analysts attributed the dollar's rise to its recent substantial fall, experiencing a 3% drop in November, the most significant monthly decline in a year. Traders closely await US economic indicators this week, particularly November's non-manufacturing ISM figures and nonfarm payrolls report, for insights into future interest rate trajectories.
The Federal Reserve's anticipated rate cut by the first half of next year has been largely priced into the market. Thierry Wizman, Macquarie's Global FX & Interest Rates Strategist, emphasized the Fed's reactive stance to hard data, suggesting a potential return to lower yields if economic activity weakens and inflation retreats.
The dollar faced a slight setback against the yen, while China's yuan remained stable against the greenback, supported by significant dollar sales by major state-owned banks. In the cryptocurrency sphere, bitcoin maintained its momentum around $41,806, nearing the previous session's peak of $42,404, supported by expectations of US rate cuts and the probable approval of spot bitcoin ETFs by American regulators, enhancing accessibility to the bitcoin market.
Antoni Trenchev, Nexo's Co-founder, noted Bitcoin's recent surge, highlighting its rise from $30,000 in late October to its current position near $40,000. This upward trend reflects mounting enthusiasm about an imminent spot ETF approval, potentially expanding the bitcoin market to a broader investor base.