Australian Dollar retreats towards 0.7000 despite RBA’s hawkish stance

• Near 0.7015, AUD/USD edges lower in early Asian trading on Thursday.
• An inflation outlook materially worse than the RBA had forecast could bring another rate rise as early as November, according to the bank’s Hauser.
• The direction of the Fed’s next policy moves remains a key market driver.

With weekly US Initial Jobless Claims figures due later on Thursday, AUD/USD eases towards 0.7015 in the early Asian session. A cautious market mood and demand for safe havens lend some support to the US Dollar (USD) against the Australian Dollar (AUD). Traders will be watching the claims release for further direction.

According to Fars News, an Iranian official threatened to target US political figures should American strikes resume, significantly escalating Tehran’s warnings. Separately, the Saudi-led coalition reported early on Wednesday that it had intercepted and destroyed five drones launched towards Saudi Arabia. Continued tensions across the Middle East could support safe-haven currencies, including the Greenback, and weigh on the pair.

For the Aussie, Andrew Hauser’s remarks have prompted traders to increase bets on a Reserve Bank of Australia (RBA) rate rise. Speaking on Wednesday, the RBA monetary policy board member warned that the inflation outlook for the coming months was “materially worse”. He reiterated the warning that the outlook for inflation over the coming months was “materially worse”.

According to the Guardian, the implied probability of a rate rise at the November policy meeting increased to 45%, up from 30% before Hauser spoke. Such a move would mark the fifth increase this year, taking the Official Cash Rate target (OCR) from its current 4.6% to 4.85%, the highest level since the global financial crisis.

RBA rate rise bets increase after Hausner warns of “materially worse” inflation outlook

Following hawkish comments from RBA Deputy Governor Andrew Hausner, MUFG analysts say Australia’s rates market has moved “to price in a higher probability of another RBA rate hike before the end of this year”. Against the RBA’s August forecasts, Hausner described the inflation outlook as “materially worse”, noting that “we’re seeing higher AI prices, tech prices feeding through into CPI…and we’re having a boom in data centre construction here in Australia as well, so that’s upside too, and then on domestic capacity pressure”.

Another concern raised by Hausner, MUFG stresses, was that “inflation has been high for a very long time now, and we are beginning to see some signs that people in the community are not sure if we’re going to bring inflation back to target, or certainly not for an extended period”. The bank says these hawkish remarks have led market participants to price in “closer to a 50:50 probability of another RBA hike next month”.

Warsh leaves Fed options open as he highlights investment surge and AI

At 5.6/10, the FXS Speechtracker score for Fed Chair Warsh’s remarks came in below the historical average of 6.1/10, indicating slightly less conviction than the established baseline in a moderately constructive but cautious message. His acknowledgement of being “over-scarred from the Global Financial Crisis” points to an enduring risk-averse bias. At the same time, Warsh highlighted a structural upswing in growth and investment fuelled by “good policies”, while declining to commit in advance to either the October or December decision. By presenting AI as a near-term demand shock and a future source of greater confidence in the data, he suggested that the Fed is embracing technological tailwinds while monitoring uncertain effects on the labour market and possible risks to financial stability.

Despite the slightly softer FXS Speechtracker reading, the FXS Fed Sentiment Index remained elevated at 127.51, registering a change of 0.00 points and continuing to indicate a firmly hawkish stance. Together, the high index reading and non-committal forward guidance suggest that markets still price in a restrictive Fed reaction function. Warsh’s emphasis on output, employment, inflation and tail risks reinforces a preference for keeping policy tight rather than pointing to an imminent change of course.

Technical Analysis: AUD/USD stays below the 100-day SMA

On the daily chart, the 100-day simple moving average (SMA) and upper Bollinger band sit just above AUD/USD, keeping the upside tentatively constrained, while the Bollinger midline provides nearby support. With the Relative Strength Index (14) at around 51, momentum appears modestly positive but lacks conviction. That reading is consistent with a neutral short-term outlook as the pair fluctuates around 0.70.

The first upside barrier is the 100-day SMA at 0.7035, closely followed by the upper Bollinger band, also at 0.7035. Buyers would need to overcome this narrow supply zone to build on gains. Below current levels, the middle Bollinger band around 0.6975 provides initial support, while the lower band near 0.6915 offers a firmer floor should selling pressure return.

(The technical analysis of this story was written with the help of an AI tool. Learn more.)