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Australian Dollar edges higher as RBA rate-hike odds linger

S&P reaffirmed Australia’s AAA credit rating, but analysts cited slower GDP growth risks as a counterweight to AUD strength.

Reported · Written up by our desk · Major Pairs

FXStreet reports the Australian Dollar is weighing solid long-term fiscal fundamentals against near-term growth headwinds and shifting expectations for Reserve Bank of Australia policy.

The update points to S&P’s reaffirmation of Australia’s AAA credit rating, supported by low public debt and robust institutions, while warning that sluggish GDP expansion and persistent inflation still pose risks to the domestic economy.

It also notes that a softer US Dollar and the prospect of an RBA rate hike in November have helped AUD/USD maintain an upward trajectory since July.

BNY and Rabobank perspectives highlighted in the piece say higher interest rates could weigh on demand, with Rabobank also raising its three-month AUD/USD forecast to 0.71 from 0.70 as it watches upcoming RBA guidance, including the August 11 policy meeting.

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