AUD Slips After RBA Rate Rise on Stronger Dollar and Bearish Options Gains

The Australian dollar slipped back to near 0.6990 on Tuesday after initially rising towards 0.7030 following the Reserve Bank of Australia's decision to raise the Cash Rate by 25 basis points to 4.60%, its highest level in about 15 years.

The RBA's unanimous decision was seen as a move to combat inflation, which remains too high according to policymakers. However, markets then focused on guidance around further rate increases and whether additional tightening is needed.

The AUD/USD pair has been underpinned by elevated US Treasury yields and expectations of further Federal Reserve tightening, with the PCE Price Index and NFP data in focus.

Derivative traders are recommended to look at short-term bearish strategies, as buying short-dated put options with a strike price near 0.6950 could be an effective way to play the immediate downside.