AUD/USD Eyes Gradual Gains Above 0.70 on Risk Sentiment and Weaker Dollar

The Reserve Bank of Australia (RBA) maintained its policy rate at 4.35% in a unanimous decision, as expected by analysts.

AUD/USD initially dipped after the policy statement release but later rebounded when RBA Governor Michele Bullock reiterated hawkish statements, warning of persistent inflation risks and future rate hikes if inflation stays sticky.

The RBA highlighted softer property market conditions, including weaker wealth effects, rising interest rates, and tighter investment property tax rules, as an important transmission mechanism to aid its mandate of bringing down inflation.

MUFG's global team expects AUD/USD to move gradually above 0.70, driven mainly by risk sentiment, Fed rate cuts, and a weaker US Dollar.