RBA hawkish signal steadies Aussie as kiwi hits 17-month low

what happened

The Australian dollar was little changed on Tuesday as a global selloff in risk assets offset hawkish signals from the Reserve Bank of Australia, Newsmetry API reported. Its New Zealand counterpart, meanwhile, fell to levels last seen in April 2025.

Minutes from the RBA’s latest meeting showed the board was united behind a 25-basis-point increase to 4.60% and concerned that inflation could remain too high for too long. Andrew Boak, an economist at Goldman Sachs, described the minutes as hawkish because officials stressed excess domestic demand while giving little attention to previous increases or downside economic risks. He said the communication lowered the threshold for another hike in November, depending on third-quarter inflation data.

Those figures are due later this month and could show core inflation rising a steep 1.0% quarterly, leaving the annual rate at 3.6%, well above the RBA’s 2% to 3% target. Markets imply a 28% chance of a hike at the November 3 meeting and roughly 50% odds of a move in December. A business survey also found that higher rates and energy costs were hurting confidence, margins and expenses.

The Aussie held around $0.6956 after retreating from an overnight high of $0.6995. A break below $0.6904 would put the June trough at $0.68665 in focus. The kiwi traded near $0.5585 after losing 0.5% overnight; a break of $0.558 could expose $0.5485. The premium on New Zealand 10-year bonds over Treasuries shifted from about +40 basis points early in the year to -18 now. Markets price a 60% chance that the RBNZ will raise its cash rate by 25 basis points to 3.0% on October 28, with rates seen at 3.75% by August next year.

why it matters

For currencies, the RBA minutes increase the importance of the coming core-inflation release for November rate expectations. The kiwi’s decline also reflects a sharp change in the relative yield appeal of New Zealand bonds versus U.S. Treasuries.

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