• The Australian Dollar may regain its ground due to a hawkish sentiment surrounding the RBA.
• Australia’s Monthly Consumer Price Index increased 2.7% YoY in August, falling short of expected 2.8% rise and previous 3.5% rise.
• Fed’s Bowman urged caution regarding central bank rate cuts, citing inflation indicators above the 2% target.

The Australian Dollar (AUD) gave up its intraday gains against the US Dollar (USD) after a weaker-than-expected Monthly Consumer Price Index report on Monday. However, the commodity-linked Aussie found support as China, its largest trading partner, announced a new round of stimulus measures.

The Reserve Bank of Australia (RBA) held the Official Cash Rate (OCR) steady at 4.35% on Tuesday, offering support to the Australian Dollar and bolstering the AUD/USD pair. During the press conference following the policy decision, RBA Governor Michele Bullock confirmed that rates will remain on hold for now and clarified that a rate hike was not explicitly considered during the meeting.

People's Bank of China (PBOC) Governor Pan Gongsheng announced on Tuesday that China will reduce the reserve requirement ratio (RRR) by 50 basis points (bps). Gongsheng also noted that the central bank would lower the 7-day repo rate from 1.7% to 1.5%, and reduce the down payment for second homes from 25% to 15%. Additionally, the PBOC cut the one-year Medium-term Lending Facility (MLF) rate from 2.30% to 2.0% on Thursday, following the last reduction in July 2024, when the rate was lowered from 2.50%.