Australian Dollar Wavers After RBA Delivers Another Hike

By Fabiana Negrin Ochoa

The Australian dollar softened after getting an initial lift from the central bank's latest rate hike, signaling some doubt about how much more tightening lies ahead.

The Aussie strengthened after the Reserve Bank of Australia on Tuesday delivered its fourth interest rate increase of the year, but gave up ground against the greenback following RBA Gov. Michele Bullock's press conference.

The Aussie was last trading below the closely watched level of 70 U.S. cents, around its weakest point since end-July.

Though policymakers stressed that they stand ready to tighten policy further if needed, analysts say the overall messaging might have pared market expectations of how far the RBA's prepared to go, denting the prospects that the Aussie will retain its position as one of the highest yielders among G-10 nations.

"The RBA's message was somewhat ambiguous," said Patrick Munnelly at Tickmill Group. The partner for market strategy at Tickmill said the tone of the statement feels mildly negative for the currency given how much tightening already priced by rates markets.

The bank clearly recognized the need to contain inflation but is wary of the lagged effects of previous tightening.

At the post-meeting press conference, Bullock said the RBA's board had considered a hold too, and that she hoped the four hikes delivered so far would be enough to tame inflation.

Addressing the recent surge in bond yields, Bullock said tightened financial conditions had tightened, but didn't characterize the moves as disorderly--framing Munnelly said leaves the RBA's next move heavily dependent on energy prices and inflation data.

"If oil continues to rise, the RBA may need to deliver more. If crude stabilizes and domestic data soften, the bar for additional tightening rises," he said.

That comes as the Australian dollar had already lost some upward momentum this month, which MUFG senior currency analyst Lee Hardman attributed to broad-based greenback strength, commodity prices' correction lower and the rise in global bond yields.

The latter creates a more challenging backdrop for risk sentiment, weighing on the near-term performance of high-yielding G-10 currencies like the Aussie, Hardman said.

UOB strategists have held a negative view on the Aussie even before Tuesday's decision, seeing scope for the currency to test 0.6970 U.S. cents despite its substantial weakening over the past weeks, before a likely stabilization.

What direction the Aussie currency takes next will depend on market interpretations of signaling not just by the RBA but by other central banks in major economies, how the Middle East conflict continues to affect commodities prices and if the bond market turmoil calms.

Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com

(END) Dow Jones Newswires

September 29, 2026 06:06 ET (10:06 GMT)