Aussie holds near multi-week highs ahead of RBA decision

Stronger household spending and weaker US jobs data support AUD/USD

AUD/USD finished higher last week at 0.7068 (+0.54%), marking its highest weekly close since early June. The gains were driven by a supportive mix of firmer domestic data and a dovish repricing in United States (US) rate expectations following Friday’s softer-than-expected non-farm payrolls report.

The Aussies rally began on Tuesday last week after the release of Australian household spending data for June, which rose 0.8% month-on-month following a strong 1.2% increase in May. The firmer spending figures helped lift some of the recent doom and gloom surrounding depressed consumer confidence and the softening housing market.

The Aussie then finished the week on a high note after a surprisingly weak July non-farm payrolls report showed the US economy unexpectedly shed 23,000 jobs, well below the +80,000 expected, with earlier months also revised lower by a combined 103,000 jobs.

That cooling US labour market picture saw the odds of a September Federal Reserve (Fed) rate hike fall to around 44% from approximately 65% a week earlier, weighing on the US dollar. A strong week for equities added to an already constructive backdrop for risk-sensitive currencies, including AUD/USD.

Looking ahead, the main drivers this week will come from a mix of local and offshore sources. Offshore, markets will be watching Wednesday night's US inflation data closely as a key input ahead of the Fed’s September meeting. Domestically, all eyes turn to tomorrow afternoon’s Reserve Bank of Australia (RBA) policy decision, previewed below.

RBA interest rate decision

Date: Tuesday, 11 August at 2.30pm AEST

At its June meeting the Reserve Bank left the cash rate unchanged at 4.35% in a unanimous decision, following three consecutive 25 basis point hikes earlier in the year that had taken the cash rate from 3.60% to 4.35%.

In the accompanying statement the Board noted that inflation remained too high, with both headline and underlying measures still elevated, and observed that some firms were continuing to pass on cost pressures while short-term inflation expectations, although lower than earlier in the year, remained elevated. In the post-meeting press conference, Governor Bullock emphasised that the earlier hikes had put the Board in a better position to assess how previous tightening was flowing through the economy. She made clear that inflation was still too high and that the decision to keep rates on hold did not rule out further increases if required.

Since then, the tone has softened a little. In a speech on 28 July, Governor Bullock struck a somewhat less hawkish note, stopping short of describing the August meeting as genuinely live and acknowledging weakness in housing and employment as well as the already restrictive stance of policy. A day later the June CPI report showed annual headline inflation easing to 3.8% from 4.0%, while the RBA’s preferred trimmed mean held steady at 3.6% — a better outcome than feared.

These developments have seen the Australian rates market swing from pricing a roughly 40% chance of a hike (after the strong June labour force report release on the 23^rd of July) to a 97% probability that the cash rate will be left unchanged at 4.35% tomorrow. 

Attention will therefore focus on the accompanying statement and Governor Bullock’s press conference. The tone is still expected to remain hawkish, with the Governor likely to emphasise the persistence of above-target inflation. Updated forecasts are expected to show a modestly weaker near-term GDP growth profile and a higher unemployment path, while inflation is still not projected to return to the midpoint of the target band until 2028.

At its June meeting, the RBA left the cash rate unchanged at 4.35% in a unanimous decision, following three consecutive 25 basis point (bp) hikes earlier in the year that had taken the cash rate from 3.60% to 4.35%.

In the accompanying statement, the Board noted that inflation remained too high, with both headline and underlying measures still elevated, and observed that some firms were continuing to pass on cost pressures while short-term inflation expectations, although lower than earlier in the year, remained elevated. In the post-meeting press conference, Governor Michele Bullock emphasised that the earlier hikes had put the Board in a better position to assess how previous tightening was flowing through the economy. She made clear that inflation was still too high and that the decision to keep rates on hold did not rule out further increases if required.

Since then, the tone has softened a little. In a speech on 28 July, Governor Bullock struck a somewhat less hawkish note, stopping short of describing the August meeting as live and acknowledging weakness in housing and employment, as well as the already restrictive stance of policy. A day later, the June consumer price index (CPI) report showed annual headline inflation easing to 3.8% from 4.0%, while the RBA’s preferred trimmed mean held steady at 3.6%, a better outcome than feared.

These developments have seen the Australian rates market swing from pricing a roughly 40% chance of a hike, following the strong June labour force report on 23 July, to a 97% probability that the cash rate will be left unchanged at 4.35% tomorrow.

Attention will therefore focus on the accompanying statement and Governor Bullock’s press conference. The tone is still expected to remain hawkish, with the Governor likely to emphasise the persistence of above-target inflation. Updated forecasts are expected to show a modestly weaker near-term gross domestic product (GDP) growth profile and a higher unemployment path, while inflation is still not projected to return to the midpoint of the target band until 2028.

RBA cash rate chart

AUD/USD technical analysis

AUD/USD’s decline from the early-May high of 0.7277 found support in late June at 0.6863, just ahead of the then 200-day moving average.

The rebound from that low appeared to be losing momentum when the pair dipped to 0.6920 in late July before finding a second wind into August. That recovery has left the pair eyeing a key layer of resistance around the 0.7080 - 0.7100 zone, the area from which it broke down in early June.

A sustained break above that resistance after tomorrow’s RBA decision and Wednesday night’s US CPI release would open the way for a retest of the May high at 0.7277.

Be aware that unless AUD/USD can clear the 0.7080 - 0.7100 resistance zone, a pullback towards the psychologically important 0.7000 - 0.6980 support area remains possible, with further downside scope towards the 200-day moving average, currently near 0.6925.

AUD/USD daily chart

• _{Source: TradingView. The figures stated are as of 10 August 2026. Past performance is not a reliable indicator of future performance. This report does not contain, and is not to be taken as containing, any financial product advice or financial product recommendation.}