Australian Dollar regains some lost ground following RBA’s dovish rate hike

Despite a partial recovery from its post-RBA decline, AUD/USD remains lower on the day.
Bullock indicates that a pause to review incoming data may follow the RBA’s rate increase to 4.85%.
Oil price volatility, the US midterm elections and forthcoming US jobs data remain on traders’ radar.

AUD/USD remains under pressure despite recovering part of its initial decline following the Reserve Bank of Australia’s (RBA) monetary policy announcement earlier on Tuesday. The announcement sent the pair to a two-week low of 0.6961. At the time of writing, it is trading near 0.6990, a decline of 0.10% for the day.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

With inflation surging amid the global oil shock caused by the war in the Middle East, the RBA delivered its fifth rate increase this year. The widely anticipated 25 basis points (bps) rise lifted the cash rate to 4.85%, its highest level since 2008.

Rather than drawing support from the hike, the Australian Dollar weakened as market participants weighed a divided vote and less hawkish policy guidance. The increase received support from six board members, while three favoured leaving rates unchanged. An explicit reference to additional hikes if required was also removed from the RBA’s guidance.

Signalling caution, RBA Governor Michele Bullock described it as “probably best to pause and assess incoming data.” She added that she was “uncertain about the next rate move” and emphasised that monetary policy “requires time to take effect.”

Even so, the central bank reiterated that “the Board will continue to do what it considers necessary to bring inflation sustainably back to target.” On the inflation outlook, it cautioned that inflation is “not expected to reach the top of the 2-3 per cent target range until late 2027, around three quarters later than previously forecast.”

Oil price swings are also driving uneven trading in the US Dollar (USD) on Tuesday. Prices have eased after unconfirmed reports suggested that Washington and Tehran had offered concessions on Iran’s nuclear programme and frozen funds, fuelling optimism over diplomatic progress.

With the US midterm elections also in focus, the US Dollar Index (DXY) is trading near 101.80, broadly unchanged for the day. The index measures the Greenback’s performance against six major currencies.

US labour market releases are another focus, with Tuesday’s JOLTS Job Openings report beginning a run of data that concludes with Friday’s Nonfarm Payrolls (NFP). These releases could influence expectations of a December Fed rate hike, potentially giving AUD/USD a fresh directional cue.

How Is the Australian Dollar Performing Today?

The Australian Dollar’s strongest performance today was against the Japanese Yen. Its percentage moves against the major currencies listed are set out in the table below.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.04%	-0.03%	0.13%	-0.07%	0.09%	-0.03%	0.13%
EUR	-0.04%		-0.06%	0.09%	-0.05%	0.06%	-0.07%	0.09%
GBP	0.03%	0.06%		0.15%	-0.04%	0.12%	-0.02%	0.16%
JPY	-0.13%	-0.09%	-0.15%		-0.19%	-0.05%	-0.17%	0.00%
CAD	0.07%	0.05%	0.04%	0.19%		0.15%	0.03%	0.20%
AUD	-0.09%	-0.06%	-0.12%	0.05%	-0.15%		-0.12%	0.04%
NZD	0.03%	0.07%	0.02%	0.17%	-0.03%	0.12%		0.18%
CHF	-0.13%	-0.09%	-0.16%	-0.01%	-0.20%	-0.04%	-0.18%

Percentage movements between major currencies are displayed in the heat map. Read the base currency from the left-hand column and the quote currency from the top row. For instance, selecting the Australian Dollar on the left and following its row across to the US Dollar gives the percentage change for AUD (base)/USD (quote) in the corresponding cell.