Markets now assign over 60% probability to another RBA rate increase by year-end following hawkish July meeting minutes.
The Australian dollar recovered to 0.7160 against the USD after the Reserve Bank of Australia’s July meeting minutes signaled a hawkish stance. Several board members indicated another rate hike may still be necessary due to persistent inflation risks, including rising oil prices and cost pass-throughs.
Prior to the release, futures markets had priced a roughly 60% chance of a move by December, now slightly higher. Wednesday’s July Consumer Price Index data will provide the next key test for policy expectations. The USD remained under pressure from reports of expanded Treasury buyback operations.
Technical indicators show AUD/USD holding above key moving averages, with resistance at 0.7167 limiting further gains for now.