Australian dollar slides as Fed rate outlook strengthens dollar and yen gains

The Australian dollar weakened across major pairs on Wednesday. In the AUD/JPY market the pair fell to around 111.70, slipping below its 100‑day simple moving average and testing the lower Bollinger Band. Japanese Chief Cabinet Secretary Minoru Kihara warned that Japan would act if currency markets became volatile, prompting yen buying pressure.

Across the Pacific, AUD/USD slipped to 0.6890, a two‑month low, as the U.S. dollar surged on expectations that the Federal Reserve may raise rates as early as September. The Fed’s forward guidance, with a high probability of a rate hike before year‑end, lifted the dollar index above 101.80. Declining metal prices also weighed on the Aussie. Australian CPI data showed inflation easing to 4.0% year‑on‑year in May, while the Reserve Bank of Australia kept its cash rate at 4.35% and signalled openness to further tightening. Together, these factors kept the Australian dollar on a bearish trajectory.