AUD/USD ARRESTS BACKSLIDE POST-DOVISH RBA, STRUGGLING TO RECLAIM 0.6450

The AUD/USD fell after a dovish RBA hiked rates but talked down expectations at the same time.

The Aussie shed 1.5% post-RBA 25 basis point rate hike.

Coming up in the mid-week: Fed Chair Powell speech, Aussie Consumer Inflation Expectations.

The AUD/USD tumbled 1.5% on Tuesday, falling to 0.6404 after the Reserve Bank of Australia (RBA) delivered a broadly expected 25 basis point rate hike and wrapped it in a dovish statement, sending the Aussie (AUD) skidding against the US Dollar (USD). The Aussie recovered to head into Wednesday trading near 0.6440.

RBA hikes interest rate to a 12-year high of 4.35% in November

Despite the 25 basis point rate hike, the RBA remains concerned about a slowdown impacting the Australian economy as consumer spending remains tepid, even as inflation risks continue to remain high. The RBA's pace of rate hikes may have been too little, too early to eat away at inflation expectations at the street level after the Aussie central bank stood pat on rates for four consecutive meetings.

Wednesday will see an appearance from Federal Reserve (Fed) Chairman Jerome Powell will be delivering speaking notes at a conference at the Division of Research and Statistics in Washington, DC. After last Friday's Nonfarm Payrolls (NFP) disappointment that sparked broad-market hopes of a decisive end to Fed rate hikes, investors will be watching the Fed head carefully.

Early Thursday sees November's Australian Consumer Inflation Expectations, which last came in at 4.8% for October