The Australian dollar advanced to a three-year high on Wednesday after comments from Reserve Bank of Australia Deputy Governor Andrew Hauser reinforced expectations that policy could tighten again before year-end.
AUD/USD climbed 0.8% to trade above $0.71 for the first time since early 2023 as market participants reacted to Hauser’s observation that inflation pressures remain persistent. His remarks emphasized that the central bank would not hesitate to act again if necessary to ensure price stability, a signal markets read as maintaining a tightening bias.
Traders scaled up the probability of another near-term rate hike in light of the deputy governor’s stance. The RBA had raised its cash rate by 25 basis points at its previous meeting, taking the policy rate to 3.85%.
Market momentum behind the local currency was also aided by a softer U.S. dollar heading into key U.S. jobs data scheduled later in the global session. Participants noted that the forthcoming employment figures could influence the Federal Reserve’s policy trajectory, a development that in turn can affect dollar crosses such as AUD/USD.
Currency markets interpreted Hauser’s comments as a clear reaffirmation of the RBA’s willingness to tighten further if inflation does not abate. That stance, combined with anticipation over U.S. labour-market information and the dollar’s near-term softness, underpinned the rally in the Australian dollar on Wednesday.
Market context and outlook
Investors are weighing the RBA’s recent 25 basis point increase to a 3.85% policy rate against the possibility of additional tightening later in the year. Hauser’s public comments have raised the odds that the bank will act again should inflation remain elevated, a dynamic that encourages market pricing for another rate move.
At the same time, attention remains on U.S. labour-market data due later in the session. Because those figures could shape expectations for the Federal Reserve’s path, they are an important near-term influence on the U.S. dollar and, by extension, on AUD/USD.
Overall, the combination of sustained RBA hawkishness and short-term dollar weakness supported the Australian dollar’s climb to its three-year high on Wednesday.