AUD Sees Muted Reaction to Hawkish RBA Tone

AUD

The Aussie Dollar opens flat against the major currencies as yesterday’s RBA interest rate decision went largely as expected, holding the Australian Cash Rate to 4.35%. Asian equities ended mixed yesterday as the U.S. and Iran prepare to formally sign their interim peace deal. The Nikkei traded +0.1%, the Hang Seng -1.4% and Shenzhen -0.15%. Locally the ASX 200 finished slightly higher with energy and utilities leading gains at +1.1% and +0.7%. RBA Governor Michele Bullock took questions at a press conference following the RBA meeting and noted that "Another hike later in 2026 remains firmly on the table, and our view remains that the next move is more likely to be up than down". The Bank of Japan also met yesterday and hiked their interest rates to 1.0%, marking a thirty-one year high on their interest rate. Commodities were down overall, with the largest movers being Crude Oil -5.2%, Coal -1.6% and Cotton 1.2%. No major data pieces will be expected to release today out of Asia and Australia.

USD

The AUDUSD opens flat at 0.7070 as markets were muted due to minimal data releases overnight and in anticipation of tonight’s US Federal Reserve interest rate decision. The technology sector weighed on Wall St. overnight with the Nasdaq closing -1.2%, the S&P 500 -.6%, and the Dow Jones +.6%. The US Federal Reserve is largely expected to hold their interest rates at 3.75%, but the attention and focus will be on the tone of the communication following, especially as this will be the first meeting for Kevin Warsh. The statement may shift away from an easing bias toward a more neutral bias. Additionally, US President Trump will be holding a press conference at the G7 Meetings in France, and American retail sales data will be released later tonight. 

EUR

The AUDEUR opens slightly down at 0.6088 as the pair continues to trade sideways between 0.6083 and 0.6107 over the week. European equities closed higher with the DAX +0.1% and CAC +0.8%. The German ZEW Survey for June printed at +10.5, up from, -10.2 and better than forecasts of -5.5. Tonight will have ECB President Lagarde speaking at COTEC Foundation International Summit in Venice. No major economic data ahead of Flash Manufacturing and Flash Services PMIs on Tuesday night.

GBP

The AUDGBP opens flat at 0.5264 this morning. No major economic data was released out of England last night, with English equities closing higher (FTSE +0.6%). This afternoon, UK CPI y/y data will be released and is expected at 3.0% from 2.8%. England is currently struggling with stagflation, battling higher than desired inflation without the accompanying economic growth. Tomorrow the Bank of England will meet to decide the Official Bank Rate and are expected to hold rates steady at 3.75%.

NZD

The AUDNZD opens in the red at 1.2120, as mixed Kiwi inflation fears caused the currency pair to trade between 1.2118 and 1.2168 yesterday. Earlier this morning the Westpac Consumer Sentiment released at 80.4, previously 94.7 and the NZ Current Account came in as expected at -1.01B, from a previous -5.64B. Tomorrow morning GDP q/q will be released at 8:45AM and is expected to show an uptick of growth at 0.8%. This marks a significant recovery for the Kiwi economy, having seen a technical recession last year.