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Australian dollar eyes two-month high as Fed hike hopes fade
AUD was near 0.7088, while markets looked to the RBA policy decision on Tuesday after expectations the bank would keep its benchmark rate at 4.35%.
The Australian dollar held gains against the US dollar on Monday, trading in the mid-0.7000s and approaching two-month highs near 0.7088 as investors leaned on a softer outlook for further Federal Reserve rate hikes, FXStreet reported.
Attention then turned to the Reserve Bank of Australia decision due Tuesday. Markets widely expect the RBA to leave its benchmark interest rate unchanged at 4.35%, with focus on the policy statement and Governor Bullock’s press release for signals on whether additional tightening could still come.
Recent Australia inflation data added context, with the RBA Trimmed Mean CPI rising to a 3.6% yearly rate in June from 3.5% in May. That figure was below the 3.7% expectation, and the article noted the RBA has already hiked rates three times in 2026.
On the US side, the dollar remained pressured after a disappointing US nonfarm payrolls report. The US Bureau of Labor Statistics showed a 23K decline in net employment in July, and futures markets priced a 44% chance of a September rate hike, down from 67% the week before, according to FXStreet.