RBA Rate Hike Supports AUD as US Dollar Gains on Inflation Concerns

The Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 4.60%, matching market expectations.

This decision provided support for the Australian Dollar (AUD), which had previously fallen against the US Dollar due to elevated oil prices and concerns over inflation.

The increase in interest rates was seen as a hawkish move, which typically benefits the AUD. However, the market's focus has shifted to upcoming US economic indicators, including this week's Personal Consumption Expenditures (PCE) inflation report and Nonfarm Payrolls report.

Market analysts are now watching these releases for further guidance on the Federal Reserve's policy trajectory, particularly with a 70% probability of another rate hike in October, as indicated by the CME FedWatch Tool.