Aud/usd recovers after rba dovish hike
ITF Team3 min read
Aud/usd clawed back losses on Nov 3, 2026, trading around 0.6990 after the RBA raised rates to 4.85% and signalled a pause, while oil and US election news kept the dollar volatile.
Key takeaways
- The RBA lifted the cash rate to 4.85% on Nov 3, 2026, its highest since 2008.
- AUD/USD fell to a two‑week low of 0.6961 before recovering to about 0.6990.
- Three RBA board members voted to hold rates, prompting a dovish tone from Governor Bullock.
- The US Dollar Index hovered near 101.80 as oil prices slipped on Iran‑US diplomatic chatter.
On Nov 3, 2026 the Australian dollar reclaimed part of the slide triggered by the Reserve Bank of Australia’s (RBA) policy decision earlier that day. The pair moved from a two‑week trough of 0.6961 to around 0.6990, down 0.10% on the day but showing a modest bounce.
Rba’s fifth hike and the split vote
The RBA raised its cash rate by 25 basis points to 4.85%, matching market expectations and taking Australian rates to their highest level since 2008. It was the fifth increase in 2026, aimed at curbing inflation that has been fed by higher global oil prices after the Middle‑East conflict. However, six of the nine board members supported the hike while three voted to keep rates unchanged. The split vote softened market reaction, as traders interpreted the dissent as a signal that policy may pause.
Governor Michele Bullock reinforced the cautious stance, saying it was “probably best to pause and assess incoming data” and that she was “uncertain about the next rate move.” While the RBA reaffirmed its commitment to bring inflation back to the 2‑3% target range, it also warned that inflation is not expected to hit the top of that band until late 2027, a full three‑quarters of a year later than previously forecast.
Why the AUD slipped despite a rate rise
A rate hike normally supports a currency by widening the yield differential with other major economies. In this case, the split vote and the softened forward guidance outweighed the nominal rate increase. Market participants focused on the lack of an explicit “we will keep raising if needed” clause, interpreting it as a possible end‑to‑cycle signal. Consequently, the AUD fell sharply in the hours after the announcement, testing the 0.6961 level, a low not seen since early October.
At the same time, the US dollar was choppy. Oil prices edged lower after unconfirmed reports that Washington and Tehran had made diplomatic concessions, easing geopolitical risk premiums. The US Dollar Index (DXY) hovered around 101.80, barely moving, while investors awaited the outcome of the US mid‑term elections and a suite of labour data, including JOLTS job openings on Tuesday and the Non‑Farm Payrolls (NFP) on Friday. A softer dollar helped the AUD regain a few ticks.
Read also: European gas TTF near EUR 100 as Iran tensions ebb and flow
Technical backdrop and key levels
The 0.6960‑0.6965 zone now acts as a short‑term support area after the recent dip. Above that, the next resistance lies near 0.7020, roughly the level where the pair stalled after the March 2026 RBA hike. Year‑to‑date, the AUD has slipped about 2.5% against the US dollar, reflecting the cumulative effect of higher rates, a stronger commodity backdrop, and the lingering risk‑off sentiment from global geopolitics.
Traders will watch the 0.7040 psychological barrier; a clear break could open the path toward 0.7100, while a retest of 0.6960 could invite further downside pressure, especially if US data point to a more hawkish Federal Reserve.
What to watch next
The immediate calendar is dominated by US labour market releases. A stronger‑than‑expected NFP could boost the dollar, pressuring the AUD back toward the 0.6960 support. Conversely, a weaker reading may keep the dollar subdued, allowing the AUD to test the 0.7020 ceiling.
On the Australian side, the RBA’s next meeting is slated for early December. Any forward guidance that hints at a pause or a further hike will be instantly priced into the market. Additionally, oil price movements remain a wild card; a rebound in crude could revive inflation concerns and support the AUD, while a sustained decline would reinforce the dovish narrative.
- RBA cash rate: 4.85% (Nov 3, 2026)
- AUD/USD low: 0.6961 (two‑week low)
- Current AUD/USD: ~0.6990
- US Dollar Index: ~101.80
Frequently asked questions
Why did the australian dollar fall after the rba raised rates?
The fall was driven by a split board vote – three members wanted to hold rates – and by Governor Bullock’s dovish comments that the bank may pause, which outweighed the 25‑bp rate increase.
What are the next technical levels for aud/usd?
Support sits around 0.6960‑0.6965, resistance near 0.7020, with a psychological barrier at 0.7040 and a longer‑term target around 0.7100 if the dollar stays weak.
Official data sources
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This article is compiled from international market news for information only. It is not investment advice.