AUD Slips Below 0.7000 as RBA Dovish Guidance Sparks Market Volatility

The Australian dollar took a hit on Tuesday, falling more than 0.40% against the US dollar to trade below 0.7000. This move comes after the Reserve Bank of Australia (RBA) raised its cash rate to 4.60%, but delivered guidance that markets saw as mildly dovish.

The RBA's decision was met with mixed messaging from the Federal Reserve, with some officials hinting at further interest rate hikes while others suggested a more cautious approach. New York Fed President John Williams stated there was no rush to raise rates, in contrast to Governor Michael Barr, who said policy needs recalibration and additional hikes are likely.

In related news, US Treasury yields remained elevated, with the 5- and 10-year yields holding above 5%, while the US Dollar Index (DXY) eased from above 101.50 to 101.25 but was still set for a 0.20% daily rise.