Aussie Dollar Dips Following RBA Remarks

AUD

The Aussie Dollar opens lower across all majors this morning following a dovish turn in market expectations after RBA Governor Michele Bullock’s speech yesterday afternoon. While her prepared remarks maintained a hawkish tone, her comments during the Q&A session highlighted recent downturns in the housing market. As a result, investors pared back expectations for an August cash rate hike down to roughly a 20% probability. Asian equities ended mixed yesterday with the Hang Seng +0.4%, Shenzhen -2.8% and the Nikkei -4%. Locally the ASX 200 gained +0.6% as consumer discretionary and communications sectors outperformed at +2.7% and +2.6%. All eyes today will be on Australia’s Q2 CPI print, where the trimmed mean measure is expected at 0.9% q/q and 3.7% y/y, which will serve as the final decisive signal for RBA policy.

USD

AUDUSD opened lower at 0.6972, with the Greenback holding steady as lower oil prices eased broader inflation concerns. Geopolitical tensions cooled after both the U.S. and Iran refrained from further attacks overnight, with President Trump stating a preference to avoid further strikes. On Wall Street, ongoing concerns over AI capital expenditure weighed on chipmakers, sending the Nasdaq down -1.0%. However, a rotation into other sectors kept broad benchmarks afloat, with the Dow Jones gaining +1.0% and the S&P 500 up +0.2%. U.S. Consumer Confidence for July printed overnight at 90.8, down from an upwardly revised 92.2 and below expectations of 92.4. High-stakes event risk arrives tonight with the FOMC policy decision, where the Federal Funds rate is broadly expected to hold steady. Communication post decision will likely avoid forward guidance as it did previously. Markets will likely focus on vote split for clues on the committee’s policy outlook.

EUR

AUDEUR opened lower at 0.6123 as the Euro picked up ground against a weaker Aussie Dollar. European equity markets closed higher in late trade, with France's CAC up +0.6% and Germany's DAX gaining +0.4%. With no major local releases overnight, Euro trade flows are tracking broader global sentiment and bond market moves ahead of tonight’s U.S. Fed decision. Looking ahead, tomorrow will bring the release of preliminary GDP and CPI figures across major Eurozone economies, providing a fresh gauge of the region's overall economic health. 

GBP

AUDGBP opened lower at 0.5248 as Sterling gained relative strength against the Aussie. London's FTSE 100 closed up +0.8%. While near-term direction is bolstered by underlying UK economic resilience, BoE policymakers are now closely watching whether recent higher energy prices will keep inflation elevated for longer. Massive event risk arrives tomorrow evening with the Bank of England's interest rate decision, where the bank rate is forecast to hold steady at 3.75%. This will be released alongside the UK Advance GDP figures, followed immediately by a speech from BoE Governor Andrew Bailey, which should provide critical clues on the central bank's next move.

NZD

AUDNZD dropped to 1.2060 as the Aussie surrendered ground against the Kiwi following the decline in Australian rate hike expectations. New Zealand job indicators continue to cling to modest growth despite business confidence turning negative, providing a stable baseline for the Kiwi. Regional risk sentiment and commodity flows will continue to guide the cross ahead of the unemployment rate next week.