RBA Keeps Rates Unchanged, AUD/USD Slides Below Mid-0.7000s

The Reserve Bank of Australia (RBA) kept interest rates unchanged at its August meeting, which was widely expected. The AUD/USD pair slid below mid-0.7000s after the announcement. A modest US Dollar uptick and the RBA's hawkish tilt limited losses for the Australian currency.

The RBA noted that inflation has been less than expected due to the Middle East conflict, but emphasized that there are still upside risks to its projection of inflation returning to target in late 2027. This statement held back traders from placing bullish bets on the AUD.

Traders were hesitant ahead of the post-meeting presser and the release of US inflation figures. The Consumer Price Index (CPI) and Producer Price Index (PPI) will be released on Wednesday and Thursday, respectively. Further developments in the Middle East crisis will also impact the USD and influence the AUD/USD pair.