FX.co ★ Australian Dollar Falls on Potential RBA Rate Cut

On Tuesday, the Australian dollar declined to approximately $0.646, influenced by rising forecasts of an interest rate reduction that have tempered market enthusiasm. There is strong consensus among analysts that the Reserve Bank of Australia will cut the cash rate to 3.60% during its forthcoming two-day policy meeting set to conclude on August 12th. This decision is driven by a slowdown in core inflation—considered the central bank's favored measure—reaching 2.7% in June and staying comfortably within its 2-3% target range. Current market assessments indicate a near certainty, with a 95% probability that the RBA will lower rates, with expectations of two additional cuts by early next year. In terms of economic indicators, the ANZ-Indeed Australian Job Ads index experienced its sharpest monthly decrease since February, in July 2025, marking its fourth decline this year and pointing to a gradual softening of labor market conditions. Meanwhile, the Composite PMI climbed to its highest since April 2022, driven by robust growth in the services sector and a resurgence in manufacturing activity.