RBA Hike Fails to Lift Australian Dollar Amid Dovish Signals

The Reserve Bank of Australia (RBA) raised interest rates to 4.60% as expected, but the Australian Dollar (AUD) fell below parity with the US Dollar (USD), trading at around 0.700.

RBA Governor Michele Bullock revealed in a press conference that policymakers had considered holding off on rate hikes due to concerns about the housing market and global economic risks.

ING's Francesco Pesole notes that while the RBA retained its hawkish stance, signaling upside risks to inflation, the dovish signals from the press conference weighed on the AUD.

Pesole maintains ING's target of 0.720 for AUD/USD in December, contingent on a softer USD and easier global liquidity conditions, but acknowledges increased near-term downside risks for the currency.