The Australian dollar declines despite RBA minutes signaling inflation concerns and a potential August rate hike.
The AUD/USD pair dropped below 0.7150 during Tuesday’s Asian session, erasing earlier gains as USD strength overshadowed hawkish signals from the Reserve Bank of Australia. The pair fell to mid-0.7100s amid renewed USD buying interest.
RBA meeting minutes revealed eight of nine board members supported the May rate hike to 4.35%, citing inflation risks from geopolitical tensions. Assistant Governor Sarah Hunter also warned of rising energy costs feeding into consumer prices, reinforcing expectations for an August rate increase.
Despite the RBA’s hawkish stance, the USD Index (DXY) regained traction, rising from its recent pullback. Investors remain cautious over US-Iran tensions and anticipate potential Fed rate hikes by year-end, supporting USD demand.