Aussie Consolidates Ahead of Reserve Bank Decision
The Australian dollar traded in a tight range ahead of an expected interest-rate cut by the nation’s Reserve Bank later on Tuesday. The dollar was little changed before a key US inflation report.
AUD/USD inched up 0.1% to 0.6521 while AUD/NZD was steady at 1.0969.
All economists in a Bloomberg survey expect the RBA to lower rates by 25 basis points, with focus on the bank’s revised forecasts and Governor Michele Bullock’s remarks at a press conference to gauge the policy outlook. Swaps traders have fully priced three cuts by mid-2026, including Tuesday, according to data compiled by Bloomberg.
“It’s not obvious that either the bank’s projections or Governor Bullock’s press conference will leapfrog pricing with a dovish surprise,” Richard Franulovich, head of FX strategy at Westpac Banking Corp. wrote in a note to clients.
But possible downward revisions to productivity alongside a reaffirming of a cautious and predictable path “should if anything keep AUD supported”.
The Bloomberg Dollar Spot Index inched 0.1% lower while the yield on 2-year Treasuries was steady at 3.77%
July CPI ex. food and energy expected to accelerate to 0.3% m/m from 0.2% in June, according to a Bloomberg survey
“There is a risk of a larger impact on goods inflation from tariffs, which would boost US interest rates” and push the dollar higher, Kristina Clifton, a senior economist and currency strategist at Commonwealth Bank of Australia wrote in a note to clients
“So far, US companies have absorbed most of the tariff costs. However, US tariff revenue continues to accelerate every month and will materially bite into profit margins if businesses do not increase selling prices”
NZD/USD inched 0.1% higher to 0.5943
USD/JPY rose 0.2% to 148.38
EUR/USD steady at 1.1617
GBP/USD little changed at 1.3432
Source : Bloomberg
