RBA held at 4.35% with Bullock keeping a hike on the table; Aussie whipsawed on the decision. Oil fell on Iran-Oman Hormuz progress. US CPI lands Wednesday.
The Reserve Bank of Australia left its cash rate at 4.35% on Tuesday, a decision that was widely expected and still moved the Australian dollar. The currency whipsawed, dropping on the announcement and recovering during Governor Michele Bullock's press conference. The hold itself wasn't the story; the updated forecasts and Bullock's guidance were.
In forecasts published with the decision, inflation was revised lower and unemployment higher. The bank also cut its 2027 cash rate assumption, implying at most one more hike if needed.
Bullock said the board did not discuss a rate cut at this meeting, only a hike or a hold. A further increase is still "front of mind," she said, suggesting the bar for additional tightening remains low.
The downgraded inflation path pressured the Aussie, and the hawkish guidance pulled it back. The dollar held above 160 after the BOJ's July hike, and the Aussie firmed on the same day's RBA hold; the full session wrap is here.
US data added a second input. The NFIB Small Business Optimism Index rose to 99.8 in July from 97.4 the previous month, the highest reading since August 2025 and above the 52-year average of 98.0. The July gain was broad-based; eight of the 10 components improved, two declined. The strongest contribution came from hiring plans, which the report read as renewed willingness among small businesses to add staff. Capital expenditure plans also improved, though uncertainty stayed elevated.
Oil prices slipped after the Qatari foreign ministry spokesperson said negotiations between Iran and Oman are at an advanced stage and both sides have given positive feedback. The talks cover shipping routes through the Hormuz strait. Pakistan's interior minister arrived in Tehran for talks the same day. The New York Times said the shipping-route discussions run on a separate track from any effort to fully reopen the waterway. Iran says the strait will remain closed until the US meets its demands, which include ending military action against its allies in Lebanon, Palestine, Yemen and Iraq and lifting sanctions. Tehran also wants frozen assets released and US forces withdrawn from the region. It has separately demanded compensation for wartime damages. Elsewhere, the session stayed quiet and rangebound.
The next scheduled event is the US CPI report, due Wednesday.
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