The Australian dollar slipped below the $0.70 mark to a three-week low, as a sharp selloff in technology stocks undermined appetite for risk-sensitive assets. Frequently regarded as a barometer of global risk sentiment, the currency came under additional pressure after the Democrats’ sweeping victory in the US midterm elections stoked concerns that tighter regulation could slow investment in artificial intelligence.
Domestically, uncertainty over the Reserve Bank of Australia’s policy trajectory remained in focus after the central bank delivered its fifth rate increase of the year, lifting interest rates to an 18-year high. The decision, passed by a narrowly split 6–3 vote and accompanied by less hawkish guidance, strengthened expectations that rates have likely peaked. Even so, Deputy Governor Andrew Hauser cautioned that any erosion of public confidence in the RBA’s ability to contain inflation could make disinflation more costly and potentially necessitate a more forceful policy response.
Interest rate swaps are currently pricing in only about a 6% probability of another hike in December, while a quarter-point cut is fully discounted by the end of the year.
