AUD Gains Faded Despite RBA's Hawkish Rate Hike

Commerzbank's analysis suggests that the Reserve Bank of Australia's (RBA) recent interest rate hike has capped the upside for the Australian Dollar. The RBA increased its cash rate by 25 basis points to 4.6%, which is the highest level in about 15 years, and struck a notably hawkish tone.

The central bank signaled that rates could rise further as inflation broadens beyond energy prices. Despite this, the AUD's initial gains faded quickly, with markets already pricing nearly two more hikes by mid-2027.