- The RBA delivered its fourth hike this year earlier today. Its board voted unanimously to raise the cash rate from 4.35% to 4.60%, bringing this year’s increases to a full percentage point, and giving it the highest interest rate of any major currency. The Bank said inflation remains too high, and that high energy costs and weak domestic productivity are adding to the risk of further price rises. It remains prepared to hike again if needed.
- The Australian Dollar has fallen despite the hike. AUD/USD briefly rose towards $0.7030 after the decision, then reversed below $0.7000 and touched approximately $0.6978, a two-month low. This is a useful reminder that an expected rate increase is not automatically bullish for a currency: what matters now is whether traders become convinced that the RBA will tighten further, and whether US Dollar strength continues. The Australian Dollar is generally lower against a basket of currencies, which is an even more significant weakness.
- The US Dollar and Treasury yields remain strong, with the US 10-Year Yield reaching a new 19-year high yesterday at 5.24%. The Dollar is holding near its recent two-month high. Expectations of another Fed hike, together with uncertainty over Middle East oil supplies, continue to support the greenback and weigh on risk assets. The CME FedWatch tool now shows markets are pricing in an increased probability of two 0.25% rate hikes by the Fed before the end of 2026 at 62% probability.
- US stock markets fell quite strongly yesterday. The S&P 500 lost about 0.8%, the Dow Jones Industrial Average fell 0.7%, and the Nasdaq 100 declined about 1.1%. Asian markets are also mostly lower today, with Japan’s Nikkei 225 down about 1.2% and South Korea’s KOSPI down 0.6% during the Asian session. Rising yields are again proving difficult for technology shares to ignore.
- Gold has suffered a particularly sharp selloff. Spot Gold fell by about 4% yesterday to near $4,114 per ounce as yields rose. It has recovered slightly today, but the scale of the decline has damaged the short-term bullish technical picture. I would be cautious about treating a small bounce as a reversal while US yields remain so high. Silver is also notably lower.
- Crude Oil has risen again. Brent Crude gained about 1.7% yesterday to $106.10 per barrel as hopes of a US-Iran agreement faded. Reports suggesting possible Iranian flexibility were disputed, keeping the Strait of Hormuz and the risk of further supply disruption firmly in focus. Crude Oil remains capable of making very sharp moves on geopolitical headlines.
- Bitcoin is holding up but has lost momentum. Bitcoin is trading near $83,600, below last week’s high above $87,000. It remains above the former resistance area around $82,000, but another sustained move towards last week’s highs would be needed to restore confidence in the recent bullish breakout. However, it can be said that as long as it remains above $80,000 (or perhaps $82,000), the technical picture still shows potential for bulls.
- There will be a release of Australian CPI (inflation) data tomorrow, which is expected to show a month-on-month decline from 1.0% to 0.5%. Any surprises could lead to a move in the AUD significant enough for at least day traders to pay attention to.
Forex Today: RBA Hikes Rates, but Australian Dollar Falls Below $0.7000
Chief Analyst and Director of ContentAdam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked with...
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Chief Analyst and Director of ContentAdam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
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