RBA lowers rates, Aussie dips lower, US CPI expected to rise

Kenny Fisher MarketPulse

The Australian dollar is lower on Tuesday. In the European session, AUD/USD is trading at 0.6494, down 0.29% on the day.

RBA cuts rates to 3.60%

The Reserve Bank of Australia lowered the cash rate by a quarter-point on Tuesday in a unanimous decision, bringing the cash rate to 3.60%. This is the lowest level since April 2023 and today's cut was the third this year.

This time around the RBA didn't shock the markets, unlike the July meeting when the RBA held rates and said it needed to see additional inflation data before lowering rates.

The rate statement began by noting that inflation has "fallen substantially" since 2022 and that inflation had fallen back within the target band of 2%-3% in the second quarter.

The Board noted that headline inflation was at 2.1% and trimmed mean (a key core CPI gauge) was at 2.7%. The Board said that underlying inflation is expected to continue to ease to the midpoint of the target band and the cash rate should continue to follow a "gradual easing path".

This dovish tune in the statement was balanced out by concerns that uncertainty remains in both the global economy and at home. The Board said it would remain cautious and would remain focused on price stabililty and employment.

At a post-meeting press conference, Governor Bullock said that the growth and inflation forecasts support further rate cuts but "there is still a lot of uncertainty" and future rate decisions would be data-dependent.

US inflation expected to rise to 2.8%

The US releases the July inflation report later today. Inflation is expected to nudge higher to 2.8% y/y, up from 2.7% y/y in June. This would mark a third straight acceleration and would be the highest inflation level since February.

Monthly, CPI is projected to ease to 0.2% from 0.3%. Core CPI is also expected to accelerate to 3.0%, up from 2.9%. Monthly, core CPI is projected to rise to 0.3% from 0.2%.

Today's inflation data could shift market expectations for the September Fed meeting but the decision will very likely be rate cut, with a current likelihood of 84%, according to FedWatch's CME.

AUD/USD technical

AUD/USD is testing support at 0.6500. Below, there is support at 0.6483.
0.6500 and 0.6527 are the next resistance lines.

AUD/USD 4-Hour Chart, Aug. 12, 2025

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

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