AUD/USD ticked up on Tuesday, trading near 0.6982 and up 0.33%, as a pullback in US Treasury yields weighed on the US Dollar while hawkish RBA messaging supported the Australian unit. The US Dollar Index (DXY) eased to about 102.25 after touching 102.61 on Monday, its highest since April 2025, and the 10-year US Treasury yield slipped below 5.20% after peaking at 5.36% last week, a level last seen in 2002. Yields fell as oil prices edged lower, a sell-off in AI-linked equities boosted demand for government bonds, and short covering added to the move.
Oil, Inflation, and US Federal Reserve Outlook
Oil, however, stayed elevated with the US-Iran stalemate keeping Middle East supply risks in view, sustaining inflation concerns and expectations of tighter monetary policy. Focus turns to Wednesday’s US CPI release ahead of the Fed’s 27-28 October meeting; CME FedWatch shows markets expect rates to hold this month, while pricing an approximately 85% probability of a December hike.
Reserve Bank of Australia Policy and Currency Risks
In Australia, the RBA’s September minutes confirmed a unanimous 25 basis-point rise in the cash rate to 4.60%, citing the need to move promptly to keep inflation expectations anchored and flagging the risk that a weaker AUD could lift imported inflation.
Start trading now — click here to create your real VT Markets account.
