RBA Hike Sparks AUD Selloff on Governor's Dovish Comments

The Reserve Bank of Australia (RBA) raised interest rates by 25 basis points to 4.60%, the highest level since November 2011, with a unanimous decision.

However, despite the hawkish statement language, the Australian dollar initially barely responded to the news, only edging up slightly before reversing sharply after RBA Governor Michele Bullock's press conference.

Bullock said further tightening was merely a 'hope' rather than a base case, causing the AUD/USD pair to break through the 0.7000 support zone and fall to around 0.6977 within an hour.

The RBA's statement emphasized the materialization of upside inflation risks and kept further tightening in play, but Bullock's comments downplayed the likelihood of another rate hike.