Aussie dollar rises ahead of RBA decision

The Australian dollar strengthened to around $0.656 on Monday as investors positioned themselves for the Reserve Bank of Australia’s policy announcement due tomorrow.

Investors largely expect the OCR to be held steady at 3.60%, while a 25 bps cut is widely anticipated at the November meeting. So far in 2025, the RBA has delivered three rate cuts.

Despite the easing, Governor Michele Bullock continues to emphasize a cautious and data-driven approach, reaffirming the bank’s commitment to its 2–3% inflation target.

The Q2 CPI confirmed that inflation is easing, with headline CPI slowing to 2.1% from 2.4% and the trimmed mean falling to 2.7% from 2.9%. However, August’s monthly CPI surprised by edging up to 3% from 2.8%.

Externally, the Aussie dollar found support from a weakening greenback ahead of a series of upcoming US economic data releases, which could offer greater insight into the Fed’s interest rate trajectory amid heightened concerns over a potential US government shutdown.