Australian Dollar after hawkish RBA, US elections

AUD/USD climbs as RBA Governor Michelle Bullock emphasizes the need to maintain a restrictive rate stance.
US presidential election remains the main driver for AUD/USD ahead of Trump-Harris election.
Trump’s victory expected to be unfavorable for AUD due to his promise to raise tariffs on China.

Patricio Martín FXStreet

In Tuesday's session, the AUD/USD rose 0.77% to 0.6638 as the Reserve Bank of Australia (RBA) signaled a hawkish stance on interest rates. The central bank's Governor, Michelle Bullock, stressed the need to maintain a restrictive monetary policy amid persistent inflationary pressures.

The Australian Dollar is also being influenced by the upcoming US presidential election, with a potential victory by Donald Trump viewed as unfavorable for AUD due to his promise to raise tariffs on China. In addition, the pair is expected to react to the release of US inflation data and the Federal Reserve's (Fed) policy meeting this week, as market participants assess their potential impact on the USD.

Daily digest market movers: Australian Dollar rising as RBA favors hawkish guidance

AUD/USD strengthened as the RBA maintained a hawkish stance, leaving interest rates unchanged at 4.35%.
RBA Governor Michelle Bullock emphasized the need for a restrictive interest rate stance due to persistent upside risks to inflation.The RBA stated that policy will need to remain restrictive until inflation moves sustainably toward the target range.
The outlook for AUD/USD is uncertain amid the upcoming US presidential election, with Trump's victory potentially negative for the Australian Dollar due to his proposed tariffs on China.
Investors will also monitor the Fed's policy meeting this week, with a 25 basis point interest rate cut widely anticipated.

AUD/USD technical outlook: Bulls recover and aim for the 100-day SMA

The AUD/USD pair has been recovering after a recent decline. The Relative Strength Index (RSI) is suggesting that buying pressure is recovering, as its value is at 48, rising sharply in the negative area. The Moving Average Convergence Divergence (MACD) is suggesting that selling pressure is flat, but as it's staying in the red, a change in trend could be seen in the following sessions. The overall outlook suggests a neutral to slight positive sentiment, with the pair likely to trade within a range before breaking out.The pair is striving to hold the psychological level of 0.6600 and reclaim the 200-day Simple Moving Average (SMA) at 0.6630. This move indicates a potential shift in market sentiment, with buyers regaining control after a period of consolidation.

RBA FAQs

What is the Reserve Bank of Australia and how does it influence the Australian Dollar?

The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.

How does inflation data impact the value of the Australian Dollar?

While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.

How does economic data influence the value of the Australian Dollar?

Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.

What is Quantitative Easing (QE) and how does it affect the Australian Dollar?

Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.

What is Quantitative tightening (QT) and how does it affect the Australian Dollar?

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

GBP/USD remains slightly bid near 1.3300

GBP/USD now advances marginally and manages to dispute the 1.3300 region on Tuesday. Indeed, Cable regains some balance on the back of the lacklustre performance of the Greenback, all preceding the Fed’s meeting on Wednesday and the BoE’s gathering on Thursday.

EUR/USD recedes from tops, back below 1.1400

EUR/USD manages to set aside part of the recent weakness and clinches decent gains on Tuesday. Indeed, spot keeps the trade below the 1.1400 mark amid acceptable losses in the US Dollar, all following rising optimism of a US-Iran deal and steady caution prior to the FOMC gathering on Wednesday.

Gold bounces on poor US data

Gold remains under marked downside pressure on Tuesday, although the $4,000 zone per troy ounce emerges as a decent support for now. The precious metal’s pullback comes despite the modest losses in the US Dollar in a context of easing geopolitical tensions ahead of the key Fed event on Wednesday.

Australia CPI could boost Aussie if inflation arrives above 4%

The Australian Bureau of Statistics will publish the June Consumer Price Index on Wednesday at 01:30 GMT. The report is expected to show that inflation rose 4% from a year earlier, matching the May reading. The monthly CPI is foreseen at 0.2% following the -0.7% print from May. The ABS will also release the Trimmed Mean CPI, the Reserve Bank of Australia’s favorite inflation gauge.

Indian Rupee outlook: Downtrend set to persist – Just at a slower pace

The Indian Rupee just endured its most brutal six-month stretch in years, battered by a perfect storm of global shocks. From United States-India trade uncertainty to surging Oil prices and the significant outflow of Foreign Institutional Investment from the Indian stock market, every event brought nothing but pain for the Indian currency.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.