- The Aud/USD falls sharply from the maximum of three weeks of 0.6390, since the Australian dollar faces benefits after a strong rebound on Monday.
- China’s new monetary stimulus plan has increased the AUD appeal.
- Investors expect the Fed monetary policy decision, the points chart and the summary of economic projections on Wednesday.
The Aud/USD pair corrected about 0.6355 during negotiation hours in North America on Tuesday, after reaching a new three weeks at 0.6390 on Monday. The Aussie torque collapses while the US dollar (USD) advances, with the dollar index (DXY) attracting offers after revising the minimum of five months of 103.20.
However, the dollar is expected to operate cautiously, since the Federal Reserve (FED) is scheduled to announce the second decision of interest rates of the year on Wednesday. The Fed is almost safe to maintain stable interest rates in the 4.25% -4.50% range per second time.
Market participants will pay special attention to the FED points graph and the Summary of Economic Projections (SEP) to obtain clues about interest rates, inflation and economic perspectives. At the December policy meeting, Fed officials collectively guided two interest rate cuts for 2024.
Meanwhile, the Australian dollar (AUD) served strongly in the last two negotiation sessions due to the renewed optimism about China’s economic perspectives. During the weekend, China announced a comprehensive “special” action plan, which will mainly focus on increasing household revenues to boost domestic consumption. This scenario is favorable for the Australian dollar, since the Australian economy depends largely on exports to China.
In the domestic front, the Bank of the Australian Reserve (RBA) is expected to maintain a ‘cautious’ position on the policy of interest rates, since the tariff war of US President Donald Trump could accelerate inflationary pressures in the Australian economy.
The deputy governor of the RBA, Sarah Hunter, said Monday that he is focusing on US policies and how they will impact inflation.
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.