AUD Holds Ground After Hawkish RBA Minutes, Soft USD Provides Support

The Australian Dollar has steadied after the Reserve Bank of Australia (RBA) released minutes from its latest policy meeting, which showed a hawkish tilt. The central bank discussed the possibility of further interest rate hikes due to persistent inflationary pressures.

The RBA board emphasized that policy would need to remain restrictive until there is clear evidence that inflation is returning to the target range. This hawkish tone reinforced market expectations that the RBA is not done tightening, underpinning the Australian Dollar.

A softer US Dollar also provided support for the AUD/USD pair, as the US Dollar Index fell by 0.2% during the Asian trading session. The divergence in monetary policy expectations between the RBA and the Federal Reserve has narrowed the yield differential in favour of the Australian Dollar.