FX.co ★ Australian Dollar Set for Weekly Advance

The Australian dollar strengthened for a second consecutive session to around $0.690 and was poised for a weekly gain, underpinned by hawkish readings of the RBA’s June meeting minutes from major banks. Although markets were pricing only about a 15% probability of an August rate hike and roughly even odds that the tightening cycle has already ended, CBA characterized the minutes as hawkish, highlighting repeated references to excess demand and capacity constraints as evidence the RBA remains vigilant about inflation risks. ANZ similarly noted that the minutes reinforced the risk of an additional rate increase, even as it maintained its existing policy rate outlook.

The Aussie dollar also drew support from a weaker US dollar, after softer-than-expected US employment data cooled expectations for further Federal Reserve rate hikes. At the same time, Australia’s S&P Global Composite PMI for June was revised up to 50.4 from a preliminary 49.8, reflecting a return to expansion in services activity (50.5 vs 48.7) and stronger growth in manufacturing (51.5 vs 50.7).