The Australian dollar gained ground on Tuesday afternoon, approaching US70¢ amid widespread expectations that the Reserve Bank of Australia (RBA) will increase interest rates. The Aussie was last trading up 0.3 per cent at US69.70¢, following its previous close of US69.51¢. Last week, the dollar rose 1 per cent, marking its strongest weekly close in two years, although it retreated from a peak of US70.94¢ on Thursday as the US dollar rebounded and precious metals faced selling pressure.
According to IG market analyst Tony Sycamore, the Australian interest rate market indicates a 76 per cent probability of a 25 basis point rate hike. The market is also pricing in a second 25 basis point RBA rate hike by September 2026, reflecting expectations that the RBA will not implement a single rate increase.
Sycamore noted that as long as the dollar remains above key support levels, a retest of the US70.94¢ high is anticipated. He suggested that with multiple rate hikes delivered by the RBA this year, the currency could potentially extend its gains into the US71.50¢–US72¢ zone. The currency’s movement remains closely tied to expectations surrounding the RBA’s monetary policy decisions.
