FX.co ★ Aussie Holds Firm on RBA Hawkish Outlook

The Australian dollar held above $0.70, extending its rebound from a recent two‑month low as the Reserve Bank of Australia signaled the possibility of further policy tightening to contain inflation. At its June meeting, the RBA left the cash rate unchanged at 4.35%, but Governor Michele Bullock emphasized that the board remains vigilant to upside inflation risks and that demand still needs to cool further. Although the central bank paused to gauge the full effect of three rate hikes earlier this year, Bullock reiterated that additional increases cannot be ruled out. This hawkish stance strengthened expectations for another rate rise in 2024, with markets now assigning roughly a 30% probability to a hike in August and about a 60% chance of a final move to a peak of 4.6%. The May CPI report, due next week, will be critical for shaping that outlook. At the same time, improved risk sentiment stemming from progress toward a US‑Iran peace deal lent further support to the Aussie by easing concerns over energy‑driven inflation pressures.