Australian Dollar climbs as RBA signals tougher policy

The Australian dollar rose to around 0.6950 against the U.S. dollar after Reserve Bank of Australia (RBA) officials signaled a readiness to tighten monetary policy. Assistant Governor Sarah Hunter said the governing council is prepared to act if inflation expectations rise amid the ongoing oil‑price shock, hinting at possible further hikes. The RBA has lifted the cash rate three times this year to 4.35%, but market pricing shows only a modest chance of another increase to 4.60% at the August meeting.

The move also came as reports of diplomatic progress with Iran weighed on the U.S. dollar, limiting its downside despite broader geopolitical risks. The combination of the RBA’s hawkish tone and a softer dollar supported the AUD’s gain.

Analysts note that Australia’s export ties to China and the price of iron ore remain key drivers of the currency, but the immediate rally was rooted in the RBA’s stance and the relative weakening of the dollar.