AUD Firm as Hawkish RBA Minutes Signal Rate Hike Bias

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: August 25, 2026

Key Moments

AUD/USD traded near 0.7150 in Asian dealings on Tuesday after earlier mild losses, as markets digested the RBA’s latest Minutes.
RBA policymakers signaled they remain ready to raise rates if inflation risks from oil, broad cost pass-through, and data centers intensify.
The US Dollar stayed under pressure amid plans to expand Treasury bond buybacks and escalating secondary sanctions related to Iran.

Australian Dollar Edges Higher After RBA Minutes

AUD/USD recovered some ground in Asian trading on Tuesday, hovering around 0.7150 after a modest pullback in the prior session, following the release of the Reserve Bank of Australia’s Minutes from its July policy meeting.

The Minutes showed that the RBA Board continues to keep the door open to additional interest rate increases if inflation risks move higher. Policymakers highlighted that upside price pressures could be fueled by factors such as rising oil prices, broader transmission of cost pressures, and expanding investment in data centers.

Several members voiced concern that these forces could become more entrenched, while others emphasized offsetting downside risks to the outlook. This mix of views led the Board to judge that it has time to assess forthcoming data before adjusting policy further, reiterating that it needs clear and durable evidence that inflation is moving back toward target.

US Dollar Under Strain from Treasury Actions and Sanctions

The US Dollar remained on the back foot against major peers, including the Australian Dollar, after the US Treasury opted to double its buyback operations for longer-maturity government bonds. According to reports, Treasury Secretary Scott Bessent may use as much as $1 trillion from the Treasury General Account to fund these repurchases.

At the same time, geopolitical and policy risks intensified as the United States broadened secondary sanctions aimed at entities engaged in trade with Iran. Secretary Bessent indicated that a large financial institution could be subject to enforcement measures this week and stressed that Chinese entities would not be excluded from the scope of these actions.

Key US Data and Jackson Hole in Focus

Market participants are closely monitoring a series of upcoming US economic and policy events. On the data front, consumer confidence figures are due on Tuesday, followed by the Personal Consumption Expenditures (PCE) price index on Wednesday, which is described as a key inflation gauge.

Attention is set to peak on Friday, when Federal Reserve Chair Kevin Warsh is scheduled to speak at the annual Jackson Hole symposium. Investors expect the remarks to offer additional guidance on the near-term path for the US Dollar.

Market Sentiment Anchored to Bessent and Jackson Hole

Strategists at BNY observe that attention in the near term “stays on Bessent and Jackson Hole,” with investors effectively in a holding pattern and “markets hoping volatility remains contained until then.” They note that this focus underscores how sensitive sentiment remains to policy signals and headline risk around the upcoming gathering.

Summary of Key Macro Drivers

Driver	Details	Potential Market Impact
RBA July Minutes	Board remains prepared to raise rates if upside inflation risks from oil, cost pass-through, and data centers take hold; sees time to assess incoming data.	Supports AUD as markets price conditional hawkish bias.
US Treasury buybacks	Decision to double buyback operations for longer-dated bonds; reports indicate up to $1 trillion could be drawn from the Treasury General Account.	Contributes to downward pressure on USD.
Secondary Iran sanctions	Wider sanctions on entities trading with Iran; potential enforcement on a major financial institution, with Chinese entities not exempt.	Adds geopolitical and policy uncertainty around USD.
Upcoming US data	Consumer confidence (Tuesday) and PCE inflation (Wednesday) ahead of Fed Chair Warsh’s Jackson Hole address (Friday).	Could shape expectations for the US Dollar’s near-term direction.

Australian Dollar FAQ Overview

The article also outlines several structural factors that typically influence the Australian Dollar (AUD):

RBA interest rate policy: The cash rate set by the Reserve Bank of Australia guides broader borrowing costs, aiming to keep inflation in a 2-3% band. Higher relative rates tend to be supportive for AUD, while lower relative rates can weigh on the currency. The RBA may also use quantitative easing or tightening, with the former seen as AUD-negative and the latter as AUD-positive.
Commodity exports, especially Iron Ore: As a key export, Iron Ore prices can significantly affect AUD demand. Rising Iron Ore prices typically coincide with stronger AUD, while falling prices can pressure the currency.
Chinese economic conditions: Because China is Australia’s largest trading partner, stronger Chinese growth usually boosts demand for Australian exports and supports AUD, whereas weaker-than-expected growth can drag on the currency.
Trade balance dynamics: A positive trade balance, where export earnings exceed import spending, can strengthen AUD, while a negative balance can have the opposite effect.
Risk sentiment: Shifts between risk-on and risk-off environments also matter, with risk-on phases generally favoring AUD and risk-off episodes typically leading investors toward perceived safe-haven assets.