The Australian dollar edged back above $0.68 but stayed close to multi-month lows, as a stronger US dollar countered support from hawkish comments by Reserve Bank of Australia officials, who continued to highlight persistent inflation pressures. Reserve Bank of Australia Assistant Governor Sarah Hunter noted that the AI-driven investment boom could add to near-term inflation by boosting demand for data centers and energy. Earlier, Deputy Governor Andrew Hauser cautioned that any erosion in public confidence in the RBA’s ability to contain inflation could force the bank to adopt a more aggressive path of rate increases.
The central bank raised interest rates last week for the fifth time this year, taking the cash rate to an 18-year high of 4.85%. The decision was narrowly made, with a 6–3 split on the board and three members preferring to keep rates unchanged. At the same time, the US dollar strengthened after US employment data far surpassed forecasts, pushing the implied probability of a Federal Reserve rate hike in December to about 79%, up from 71% a week earlier. The Australian dollar also came under pressure from worries about stretched AI stock valuations and a broader deterioration in risk sentiment.
