Investors await the Reserve Bank of Australia’s policy statement after inflation data eased pressure for further rate hikes.
The Australian Dollar climbed to 0.7088 USD, its highest level in two months, as the US Dollar weakened on fading Fed rate hike expectations. The AUD’s gains were tempered by caution ahead of Tuesday’s RBA monetary policy decision, where rates are expected to remain at 4.35%.
Recent inflation data showed the RBA Trimmed Mean CPI rose 3.6% year-over-year in June, below forecasts of 3.7%, casting doubt on further tightening. The RBA has already raised rates three times in 2026, and markets are pricing in a hold.
The USD remained under pressure after July’s Nonfarm Payrolls missed estimates, with a 23K decline in net employment versus an expected 80K gain. Futures now show a 44% chance of a September Fed hike, down from 67% previously.