Australian Dollar: Risk-off and RBA tone weigh on Aussie – MUFG

MUFG’s Lee Hardman reports the Australian Dollar (AUD) has been the worst performing G10 currency overnight despite being the best performer year-to-date. Renewed risk-off sentiment tied to an AI-related chip stock sell-off and concerns over Chinese semiconductor advances have pressured the currency. Comments from Reserve Bank of Australia (RBA) Governor Bullock, which did not signal an imminent rate hike, further undermined the Aussie (AUD) while leaving one more hike priced for later this year.

Aussie slips on tech rout and RBA

"The worst performing G10 currency overnight has been the Australian dollar amidst more risk-off trading conditions."

"AI-related and tech stocks have been correcting lower since last month created a more challenging backdrop for high beta currencies such as the Australian dollar which has benefitted from the AI build out."

"It is one of the reasons why the Aussie has been the best performing G10 currency this year."

"At the same time, the Australian dollar has been undermined as well overnight by comments from RBA Governor Bullock who refrained from sending a strong signal that they are planning to hike rates again as soon as next month."

"It leaves the Australian rate market comfortable with current expectations for one more hike later this year."