AUD/USD Slips Below 0.7100 as Markets Question RBA's Hawkish Tone

The Australian Dollar (AUD) is trading lower against the US Dollar (USD) on Thursday, extending its correction from Wednesday's high near 0.7090.

Despite the Reserve Bank of Australia's (RBA) hawkish tone after leaving interest rates unchanged at 4.35%, financial markets remain unconvinced about the central bank's willingness to tighten monetary conditions further.

Analysts at Standard Chartered note that Governor Bullock emphasized the uncertainty around the RBA's forecasts and did not rule out the need for more policy tightening if upside inflation risks materialize.

However, they caution that their base case remains no more RBA rate hikes in the foreseeable future, with a skewed risk towards a hike in Q4 if demand does not slow sufficiently or if energy prices revisit recent highs.