AUD/USD is trading below 0.70 following the Reserve Bank of Australia’s fifth hike of the cycle, which lifted the cash rate target (CRT) to 4.85%, while softer industrial metals added pressure. The central bank has tightened by 125bp since February, taking policy above the 2011 peak and back to levels last seen before the global financial crisis. However, the accompanying statement struck a dovish tone, dropping guidance about potentially raising the CRT further if needed, even as it flagged risks of inflation staying above 3% over the next year and inflation expectations becoming embedded.
Policy Outlook and Central Bank Guidance
A 6–3 split vote and an official projection for a 4.9% CRT peak in June 2027 have reinforced market pricing that the hiking phase is nearing its end. Industrial metals remain the dominant driver versus RBA/Fed differentials, with the 200-day moving average at 0.7050/0.7080 described as the key hurdle after shifting from support to resistance.
Commodities and Market Positioning
Meanwhile, SGX iron ore has slipped to about $90/MT from May’s roughly $108/MT, and short AUD positioning has risen to 39.5% of open interest, the most bearish since February 2025.
