The RBA raised the cash rate by 25 bps to 4.60%, its highest since 2011.
The Bank removed its previous reference to inflation returning to the midpoint of the target range in late 2027, instead saying that further tightening is warranted to bring inflation back to target within a “reasonable period.” It also changed its guidance on future hikes from raising rates if upside risks materialize to doing so “if needed,” suggesting a higher hurdle for additional tightening.
RBA wasn’t exactly dovish, but did not reaffirm expectations of another rate hike for November. Bullock did reaffirm that rates could still be raised again if needed, but there was enough nuance in her press conference to take some shine off the headline hike.
In particular, Bullock played down the importance of tomorrow’s August CPI report. She stressed that monetary policy works with a lag and that the RBA still needs to see how this year’s tightening feeds through to the economy.
AUD/USD has slipped below 0.7000 threatening a break of a couple of important levels. The fall last week already looks to hold below the key rising trendline from the June to July lows as well as the psychological 0.7000 mark.
A breakdown under 0.7000 would also leave AUD/USD trading firmly below both of its key daily moving averages. The last similar break in November 2025 proved short-lived, while a more sustained move below both averages hasn’t been seen since April 2025.
That would open the path towards the July swing lows around 0.6913-22, before the June low of 0.6865 comes into play next. US dollar still being supported by elevated Treasury yields, AUD/USD isn’t getting much help from the other side of the equation.
For now, 0.7000 is the key line in the sand. A recovery back above roughly 0.7025-0.7050 would ease some of the more immediate technical pressure.