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Australian Dollar slips as RBA flags inflation risks
AUD/USD was around 0.7080 in Asian trade, while CME FedWatch showed traders pricing only a 35% chance of a Fed rate hike in September.
AUD/USD extended losses for a second straight day, trading near 0.7080 during Asian hours Wednesday, as Reserve Bank of Australia Deputy Governor Andrew Hauser said inflation is still unacceptably high. In remarks cited by FXStreet, Hauser said monetary policy needs to reduce demand and ease price pressures, and warned the RBA would have no choice but to raise interest rates again if inflation fails to cool. He also noted the RBA is not forecasting a recession, but it sees a general slowdown and remains concerned about upside inflation risks. The Australian Wage Price Index rose 3.2% year-on-year in Q2 2026, with quarterly wage growth at 0.8%, the weakest annual wage growth since Q4 2024. FXStreet also pointed to UOB Group guidance that AUD risk remains skewed higher unless AUD/USD falls back below 0.7070, with 0.7150 flagged as the next level to monitor.
FXStreet attributed part of the pairing pressure to a softer US Dollar, tied to easing expectations for a US rate hike next month. It noted US retail sales fell in July for the first time in nine months, and CME FedWatch pricing shows only a 35% chance of a September Fed hike, down from 47% a month earlier, after mixed US data and recent Fed dissent.