Australia dollar slips after six weeks of gains, RBA likely to hold rates

SYDNEY: The Australian dollar began the week slightly lower after six weeks of gains, with traders awaiting a central bank policy meeting on Tuesday expected to leave rates unchanged, although uncertainty lingers about how hawkish policymakers could sound.

The Aussie lost 0.1% to $0.7063, after rallying 0.6% on Friday to a seven-week top of $0.7078.

It finished last week 0.7% higher, bringing gains for the second half of the year thus far to a solid 2.5%.

Bulls are eyeing recent tops of $0.7089 and 72 cents.

The kiwi eased 0.2% to $0.5883, having risen 0.4% on Friday to as far as $0.5906, though it stalled short of a recent high at $0.5907.

Support lies at $0.5850 and $0.5762.

The two currencies have been helped by a soft US jobs report that had traders paring back odds for a near-term rise in borrowing costs, sending the dollar to its lowest in nearly two months.

The pullback in rate risk saw Wall Street close at record highs.

All eyes are now on a policy rate decision from the Reserve Bank of Australia on Tuesday.

All economists polled by Reuters expect no change in the 4.35% cash rate for a second time this year. Still, a tightening bias is expected to remain, underscoring concerns about inflation.

“While markets have virtually no chance of an August move priced, inflation risks remain elevated,” said Rodrigo Catril, a senior FX strategist at the National Australia Bank.

“Any hawkish language, upward inflation revisions in the Statement on Monetary Policy, or evidence of dissent could see markets revive discussions of a further rate hike later this year.”

The RBA has hiked interest rates three times this year to fully reverse the amount of policy easing made in 2025.

As a result, the economy has slowed, inflation readings have come in lower than expected, and the housing market has weakened by more than what the central bank expected.

Another rate hike this year is about 58% priced in.

Also coming up, Assistant Governor Christopher Kent will sit down for a Reuters Newsmaker interview on Thursday and Governor Michele Bullock will appear before parliament on Friday.