Key Moments
- The Australian Dollar advanced to near 110.70 against the Japanese Yen after the RBA raised its Official Cash Rate by 25 bps to 4.60%.
- This latest move marked the Reserve Bank of Australia’s fourth 25 bps rate increase this year.
- AUD showed broad strength in daily trading, with its largest gain versus the Swiss Franc.
RBA Hike Boosts Australian Dollar
The Australian Dollar (AUD) strengthened across major currencies following the latest monetary policy decision from the Reserve Bank of Australia (RBA). Against the Japanese Yen (JPY), the currency rose 0.25%, trading near 110.70 after the announcement.
The RBA lifted its Official Cash Rate (OCR) by 25 basis points to 4.60%. This move represented the central bank’s fourth increase of a quarter of a percentage point this year. Policymakers had been widely expected to tighten conditions again after signaling that continued policy restraint would be needed due to ongoing supply shocks and demand linked to the growth of Artificial Intelligence (AI).
“Inflation risks are materialising from Middle East, excess demand at home,” RBA Governor Michele Bullock said last week.
Australian Dollar Performance Against Majors
The Australian Dollar gained ground broadly in daily trading, with the strongest performance recorded against the Swiss Franc (CHF). The article referenced a heat map and daily performance table that tracked percentage changes for AUD pairs including USD, EUR, GBP, JPY, CAD, NZD, and CHF. It highlighted that AUD/CHF showed the largest percentage increase, for example AUD/USD at +0.01% and AUD/CHF at +0.12%.
| Base: AUD | Quote Currency | Daily % Change (example values) |
|---|---|---|
| AUD | USD | +0.01% |
| AUD | CHF | +0.12% |
The referenced heat map illustrated percentage changes among major currencies. In that framework, the currency in the left-hand column serves as the base, while the currency in the top row is the quote. For instance, selecting the Australian Dollar from the left column and moving horizontally to the US Dollar cell would show the percentage move in AUD (base) versus USD (quote).
Market Focus on RBA Forward Guidance
Investors are now closely monitoring commentary from RBA Governor Michele Bullock for indications on whether additional rate increases will follow later in the year. Market participants are particularly focused on whether the central bank will signal that it intends to keep the option of further tightening open.
According to analysts at ING, Governor Bullock is viewed as likely to continue with further tightening steps. ING’s analysis maintains that the rationale for more action remains strong, emphasizing that “inflation concerns remain elevated, and even if crude prices decline, domestic fuel prices are set to remain sticky for longer.” The firm also noted that “core CPI measures have all remained hot, the labour market is tight, and growth has proven stronger than expected,” supporting its view that the RBA will keep the door open to more hikes and that the Australian Dollar should remain underpinned.
Japanese Data in Focus: Tokyo CPI
On the Japanese side, attention is turning to upcoming inflation figures. Investors are awaiting the release of the Tokyo Consumer Price Index (CPI) for September, scheduled for publication on Friday. Expectations are for inflation excluding Fresh Food to rise to 2.4% Year-on-Year (YoY), compared with the previous reading of 1.8%.
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