TD joins big four banks flagging Australian inflation relief, all roads lead to RBA hold
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A May headline print at or below 4.2% would be the second consecutive monthly deceleration and would extend the run of data supporting the case for the RBA to pause in August after raising rates at each of its three meetings in 2026. The more significant read-through is TD's expl
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4 itemsAUD faces headwinds above 0.72 as RBA signals pause, TD warns
The Australian dollar (AUD) is likely to face significant resistance above 0.72 against the US dollar, primarily due to a dovish shift in the Reserve Bank of Australia's (RBA) messaging and external economic pressures. Per the full note from TD Securities, the RBA's recent 25 basis point hike to 4.35% was accompanied by a cautious outlook, suggesting a pause in future rate increases unless inflation data exceeds expectations. This dovish pivot, combined with geopolitical risks from the Middle East, casts doubt on the AUD's ability to sustain gains above 0.72, especially given the strong performance of the US dollar supported by hawkish Federal Open Market Committee (FOMC) signals.
Inflation dynamics strengthen the case for an extended RBA hold
The Reserve Bank of Australia (RBA) is likely to maintain its current interest rate hold throughout the remainder of the year, as broader inflation trends indicate a stronger-than-expected easing in price pressures. Per the full note by ing-think, recent CPI data reveals an annual rate of 3.9% in Q2, significantly below the RBA's expectations of 4.8%. This trend is compounded by cooling housing inflation, which could dampen domestic consumption and growth momentum.