Australian Dollar fails to recover post-RBA losses, trading near two-week low despite weak USD

The RBA’s widely anticipated 25 bps rate rise leaves AUD/USD under selling pressure for a second consecutive day.
A 6-3 split in the vote, alongside a bleak economic outlook, weighs heavily on the Australian Dollar.
Hopes for diplomacy with Iran soften the USD before the US elections, but offer no support to spot prices.

Following the Reserve Bank of Australia (RBA) policy decision, AUD/USD remains around 0.15% lower on the day, near the 0.6980-0.6975 region, in the latter half of Tuesday’s Asian session.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

A widely anticipated 25 basis points (bps) increase at the November policy meeting took the RBA’s official cash rate to 4.85%, its highest since November 2008. This was the fifth rise this year, but the decision was far from unanimous: three members favoured leaving rates at 4.60%. A bleak economic outlook from the central bank added to pressure on the Australian Dollar (AUD). The currency fell for a second consecutive day, recording its third decline in the past four days.

Under the RBA’s latest forecasts, inflation will not return to the 2–3% target band until late 2027, around three quarters later than previously envisaged. Restrictive financial conditions are also expected to constrain activity, keeping GDP growth subdued and below trend. Meanwhile, the unemployment rate is forecast to edge up to around 5.1% by late 2028. These factors largely outweigh the support from a weaker US Dollar (USD), strengthening the case for further near-term losses in AUD/USD.

Hopes for diplomacy with Iran continue to weigh on the safe-haven US Dollar as investors assess Monday’s strong US ISM Manufacturing PMI. US President Donald Trump said on Monday that Iran wants a deal to end the war and that an agreement could be reached. Iran’s President Masoud Pezeshkian also said Tehran was seeking to resolve problems through dialogue. Nevertheless, traders remain broadly cautious ahead of the US midterm elections, which will determine control of Congress.

A Democratic victory in both the House of Representatives and the Senate is strongly favoured by prediction markets; a Republican sweep would therefore represent a greater surprise for markets. Whatever the result, it should bring some market volatility and give direction to the USD and AUD/USD. Friday’s US Nonfarm Payrolls (NFP) report remains the main focus, although US JOLTS Job Openings could offer short-term opportunities later in the North American session.

Australian Dollar Performs Best Against the Japanese Yen This Week

This week’s percentage moves in the Australian Dollar (AUD) against the major currencies listed are set out below. The Australian Dollar’s strongest relative performance was against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.33%	-0.20%	0.22%	0.00%	0.72%	0.06%	-0.70%
EUR	0.33%		0.11%	0.49%	0.31%	0.97%	0.36%	-0.39%
GBP	0.20%	-0.11%		0.25%	0.22%	0.87%	0.25%	-0.50%
JPY	-0.22%	-0.49%	-0.25%		-0.18%	0.50%	-0.23%	-1.00%
CAD	-0.00%	-0.31%	-0.22%	0.18%		0.70%	-0.05%	-0.71%
AUD	-0.72%	-0.97%	-0.87%	-0.50%	-0.70%		-0.60%	-1.35%
NZD	-0.06%	-0.36%	-0.25%	0.23%	0.05%	0.60%		-0.81%
CHF	0.70%	0.39%	0.50%	1.00%	0.71%	1.35%	0.81%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. To read AUD (base)/USD (quote), for instance, locate the Australian Dollar on the left and follow that row across to the US Dollar column; the intersecting cell gives the percentage change.