RBA Governor Bullock’s cautious tone reduces August rate hike bets to 20%, weighing on the Australian Dollar.
The Australian Dollar (AUD) fell after Reserve Bank of Australia Governor Michele Bullock balanced a hawkish stance with patience, citing easing domestic demand and labor conditions. AUD/USD approached key support at 0.6904, the 200-day moving average.
RBA cash rate futures trimmed August hike odds from 30% to 20% following Bullock’s remarks. She noted that prior rate increases are still filtering through the economy but reiterated readiness to hike further if needed. The RBA’s projections show below-potential GDP growth for the next two years.
Analysts see risks skewed toward an extended pause in the tightening cycle, pressuring the AUD. The current cash rate of 4.35% is near the top of model-based estimates for the nominal neutral rate.