RBA Assistant Governor warns of further tightening as inflation risks persist, but AUD weakens on softer US inflation data.
AUD/USD declined for a third straight session, trading near 0.7060 in Asian hours Friday. The Reserve Bank of Australia signaled potential rate hikes if inflation risks resurface, though recent tightening is already cooling demand.
Analysts note higher borrowing costs, weaker housing activity, and a stronger AUD are tightening financial conditions. The RBA’s restrictive stance aims to steer inflation toward its target, but the currency’s downside may be limited by a softer USD after weaker US inflation data.
Markets await US July retail sales figures later Friday, following flat US wholesale costs in July, reinforcing expectations of cooling inflation.