The Australian dollar just got slammed

Photo by Mark Kolbe/Getty Images

In response to news that Australia’s largest mortgage lender, CBA, increased its variable mortgage rates by 15 basis points, following Westpac’s decision to lift its rates by 20 basis points last week, the Australian dollar has fallen heavily in recent trade.

Currently the AUD/USD buys .7198, well below the high of .7238 earlier in the session. It briefly fell to as low as .7184, a two-week low.

The announcement, in tandem with Westpac’s move last week, has effectively tightened financial conditions for more than half of all Australian mortgage holders, placing pressure on the RBA to cut interest rates to offset the effect of higher private-sector rates.

As Sean Callow, senior currency strategist at Westpac notes, the odds of a rate cut from the RBA in November have surged on the news.

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