AUD Gains Ground as RBA Hikes Rates, US Dollar Strengthens on Inflation Concerns

The Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 4.60%, matching market expectations.

This decision provided support for the Australian Dollar, which had been trading around 0.7020 during Asian hours on Tuesday.

Elevated oil prices have driven up US inflation concerns, leading to a stronger US Dollar and increased expectations of further tightening by the Federal Reserve.

The CME FedWatch Tool currently suggests a 70% probability of an October rate increase, with market participants awaiting upcoming US economic indicators for further guidance on the central bank's policy trajectory.