Australian Dollar gains support as RBA delivers 25-basis-point rate hike

The Reserve Bank of Australia raised its cash rate by 25 bps to 4.60%, matching market expectations.
US Dollar gains ground as elevated oil prices exacerbate inflation concerns, favoring further Fed tightening.
CME FedWatch Tool suggests 70% odds of an October Fed rate increase.

Akhtar Faruqui FXStreet

AUD/USD gains ground after recovering daily losses, trading around 0.7020 during the Asian hours on Tuesday. The pair gains support as the Australian Dollar (AUD) receives support after the Reserve Bank of Australia (RBA) decided to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 4.60% from 4.35% at its September monetary policy meeting. The decision aligned with market expectations.

The AUD/USD pair depreciated as the US Dollar gained momentum, driven by elevated oil prices stemming from ongoing uncertainty surrounding US-Iran negotiations. Persistent pressure on energy costs has heightened market expectations that the Federal Reserve will need to tighten monetary policy further to keep inflation in check.

Escalating inflation concerns and the prospect of additional rate hikes pushed US Treasury yields to fresh multi-year highs, with both the 10- and 30-year yields surging above 5%. Money markets are responding accordingly; following the Fed’s first rate increase in three years earlier this month, the CME FedWatch Tool currently reflects roughly a 70% probability of another rate hike in October.

Market participants are now focusing on upcoming US economic indicators for further guidance on the central bank's policy trajectory. Critical data releases scheduled for later this week include Wednesday’s Personal Consumption Expenditures (PCE) inflation report and Friday’s Nonfarm Payrolls report.

USD positioning steady as Rabobank highlights balanced build-up in longs and shorts

Strategists at Rabobank observe that speculative positioning in the Dollar has shown little net change, with “USD net longs largely unchanged as both long and short positions increased by 2,000 positions, respectively.” This suggests that while market participation on both sides of the trade has picked up, overall conviction on the broader Dollar direction remains broadly stable.

Economic Indicator

RBA Interest Rate Decision

The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.

AUD/USD seems vulnerable near 0.6800, 10-month low amid bullish USD

AUD/USD languishes near a 10-month low during the Asian session on Friday, awaiting a break below 0.6800 before the next leg up amid a bullish US Dollar. Firming Fed rate-hike expectations, along with fading hopes for US-Iran diplomacy, help the USD hold gains at its highest level since April 2025. Moreover, the RBA’s dovish tilt undermines the Aussie and backs the case for further losses.

USD/JPY bulls turn cautious near 160.00 amid intervention risks

USD/JPY enters a bullish consolidation phase around its highest level since early September as bulls turn cautious amid intervention risk near 160.00. Meanwhile, the downside seems cushioned as the wide US-Japan interest rate gap keeps the Yen carry trade active. Furthermore, the possibility of a jumbo Fed rate hike and Middle East uncertainties hold the US Dollar near a 19-month top, supporting the currency pair.

Gold advances marginally; still below $3,900

Gold attempts a mild bounce and approaches the $3,900 region per troy ounce at the end of the week. The marginal recovery in the precious metal comes on the back of a vacillating mood surrounding the US Dollar along with mixed US Treasury yields following the release of US October Producer Prices.

Bitcoin just posted five straight losing weeks, and the storm may not be over yet

Bitcoin is struggling to find support, slipping below $70,000 as multiple headwinds threaten to push the Crypto King lower. The much-anticipated “Uptober” rally failed to materialize, with persistent selling pressure and widespread liquidations instead reinforcing the “Rektober” narrative.

Week ahead – Fed Minutes, inflation data and Nvidia earnings to guide investors

Fed minutes may add to hawkish tone as bets of 50-bps hike grow. Nvidia to report earnings as bar to impress high after spy scandal. Trade and geopolitics to be focal point of Trump-Xi summit.

Gold hit its lowest level of 2026 near $3,850

Gold (XAU/USD) attempts to stabilize around $3,890 on Friday after falling to $3,852 on Thursday, its lowest level since October 2025. The precious metal has lost more than 4% this week, as investors increasingly anticipate further monetary tightening from the Federal Reserve (Fed). The latest decline reflects a sharp change in market expectations.