• AUD/USD declines despite USD weakness as expectations for US rate cuts rise sharply.
• Fed whisperer's comments suggest a close call on Fed's decision next week, raising the odds of a 50 bps cut to nearly 50%.
• RBA Governor Bullock remains hawkish, saying it is too soon to consider rate cuts due to high inflation.

The AUD/USD declined by 0.20% to 0.6710 in Friday's session. The Australian Dollar declined, while the US Dollar weakened following comments from a "Fed whisperer" suggesting a higher probability of a 50-basis-point rate cut at the Federal Reserve's (Fed) next meeting. In contrast, the Reserve Bank of Australia (RBA) remains hawkish, which lends support to the Aussie.

The Australian economic outlook is uncertain, with the Reserve Bank of Australia (RBA) maintaining a cautious approach due to elevated inflation. As a result, financial markets anticipate only a modest interest rate cut of 0.25% in 2024, reflecting a shift away from previous expectations of more significant easing. This cautious stance indicates the RBA's concern about inflation and its commitment to controlling price pressures while balancing the need for economic growth.