Various factors pressured the Australian dollar rate today, ranging from the RBA minutes to China's central bank announcement.

The Australian dollar has experienced a significant decline compared to other major currencies since the beginning of the week. During today's Asian session (20th June), the AUD/USD slump worsened, dropping over 0.5%. This decline followed the release of the minutes from the Australian Central Bank's (RBA) recent meeting, which was seen as somewhat disappointing.

AUD/USD

The minutes revealed that some of the RBA's top officials had initially considered not changing interest rates. Eventually, they decided to raise interest rates by 25 basis points. However, market participants viewed their hesitation as potentially impacting the likelihood of future rate hikes.

"The minutes were interpreted by market participants as dovish," said currency strategist Carol Kong at the Commonwealth Bank of Australia. "As a result, markets have pared back their expectations for the RBA cash rate, so that weighed on the Aussie."

Despite this, not all analysts have revised their expectations for the RBA's interest rate outlook. Some experts still believe the RBA will raise rates again in the coming month.

"We didn't read the Minutes of the RBA's June Board meeting as particularly hawkish," says Adelaide Timbrell, an economist at ANZ. " (But) We still think another increase in July is the most likely outcome given May's very strong labour market data, which came out after the meeting."

Two additional factors contributed to the pressure on the Australian dollar today. Firstly, international commodity prices have been declining recently, which has had a negative impact. Secondly, the People's Bank of China (PBoC) announced a ten basis point reduction in its one-year and five-year lending rates. Both of these factors indicate potential risks of slower growth in the region.

Market participants are eagerly anticipating the testimony of US Federal Reserve Chairman Jerome Powell on Wednesday and Thursday. Powell's remarks could confirm or contradict market expectations regarding the Fed's future interest rate decisions. Current market data suggests a more than 70% probability of a 25 basis point rate hike by the Fed in July. If Powell's statements are more hawkish than anticipated, the US dollar could strengthen further.