AUD Plunges Below 0.7000 Amid RBA Hike and Strong US Dollar

The Australian dollar (AUD) plummeted below 0.7000 despite the Reserve Bank of Australia's (RBA) decision to raise the cash rate by 25 basis points to 4.60%, its highest level in 15 years.

The US dollar extended its gains, reaching fresh two-month highs and moving within reach of 18-month highs, as AUD/USD fell even further.

Markets had anticipated a stronger signal from the RBA that further rate hikes remain likely, but the central bank's decision seemed to fall short of expectations.

The RBA noted that upside inflation risks are materialising, citing higher energy prices, stronger-than-expected domestic inflation, and persistent capacity constraints.