Forex traders flocking to US dollar. Here’s why

Global expectations

With rates at 4.1%, the RBA’s decision to stay is not inherently a bad signal for their currency. However, because they were expected to raise by 25 bps, markets began to tilt away from the Australian dollar. When additional banks like the BoJ act similarly, the US becomes one of the only economies that continually meets expectations. Traders are reacting by funneling into USD across pairs.

The Bank of England and the British pound retain strength as well after meeting expectations with a 25 bps rate hike. Traders will likely look for action in GBP/USD as markets determine which currency is stronger.