FX.co ★ AUD Falls After Sharp Rally

The Australian dollar dipped below $0.648 on Monday, retreating from a previous 1.1% rise, as the US dollar made strides to recover following Federal Reserve Chair Jerome Powell's dovish address. During Friday's annual symposium in Jackson Hole, Powell hinted at a possible interest rate cut at the upcoming September 17 meeting, highlighting growing employment risks. Consequently, markets are now anticipating an 85% likelihood of a 25 basis point reduction in September, with a total decrease of 48 basis points forecasted by the end of the year. Upcoming crucial data, such as the PCE inflation measure on Wednesday and August employment figures on Friday, will play a significant role in shaping the Fed's forthcoming strategy. In Australia, the Reserve Bank of Australia recently decreased its cash rate by 25 basis points to 3.60%, maintaining a cautious outlook. Markets are speculating about a potential larger 50 basis point cut in November. Traders are keenly awaiting the release of the August meeting minutes on Tuesday, which will provide further insights into the RBA's policy direction.