Australian Dollar weakens despite RBA’s Hauser hawkish remarks

• Australia’s Wage Price Index grew 3.2% year-on-year in Q2 2026, matching expectations despite hitting a multi-quarter low.
• RBA Deputy Governor Andrew Hauser warned inflation remains too high, requiring tighter monetary policy to cool economic demand.
• Weak US Retail Sales and cooling inflation reduce September rate hike probabilities to 35%.

AUD/USD extends its losses for the second successive day, trading around 0.7080 during the Asian hours on Wednesday. Addressing the broader economic backdrop, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser emphasized on Wednesday that inflation remains unacceptably high. Hauser stated that monetary policy must work to reduce demand in the economy and bring price pressures down. While the central bank is not anticipating a recession, it is seeing a general slowdown and remains deeply concerned about upside risks to inflation. Hauser warned that if inflation fails to cool, the RBA will have no choice but to raise interest rates again.

Australia’s seasonally adjusted Wage Price Index increased 3.2% year-on-year in Q2 2026, holding steady from the revised figure in Q1 and matching market expectations. While quarterly wages grew by 0.8%, maintaining the same pace seen over the previous four quarters, the annual figure represents the weakest wage growth since Q4 2024.

Aussie upside risk persists as UOB lifts near-term focus to 0.7150

Analysts at UOB Group maintain that “the risk for AUD is on the upside,” a view they have held since early August and reiterated on 17 August when spot was trading around 0.7080. At that point, they cautioned that “the risk for AUD remains on the upside but note that AUD must surpass 0.7100 before a move to 0.7120 can be expected.” The currency has since “quickly broken above both 0.7100 and 0.7120,” briefly reaching “a high of 0.7129 before retreating,” and UOB now flags “0.7150” as “the next level to monitor.” The bank adds that “only a breach of 0.7070” – with the prior “strong support” noted at 0.7050 – “would mean that the upside risk has faded.”

However, the downside of the AUD/USD pair could be restrained as the US Dollar (USD) weakens amid easing expectations of a US interest rate hike next month. Recent economic data showed that US Retail Sales dropped in July for the first time in nine months, compounding concerns after unexpected job losses last month and tame CPI inflation figures.

While the Fed left interest rates unchanged at its last meeting, three officials dissented in favor of a rate hike, leaving traders looking to the upcoming minutes for deeper insight into the division within the central bank. According to the CME FedWatch tool, traders now price in just a 35% chance of a rate hike at the Fed’s September meeting, down significantly from 47% a month earlier.

Technical Analysis:

In the daily chart, AUD/USD trades at 0.7080, retaining a bullish near-term bias as spot holds above both the nine-period and 50-period Exponential Moving Averages (EMAs). The short-term EMA clustering just beneath price suggests a constructive underlying bid, while the 14-day Relative Strength Index (RSI) at 58.4 stays in positive territory without yet reaching overbought conditions, hinting that bulls still have room to extend the advance. The technical analysis of the daily chart suggests that the pair is remaining within the ascending channel, indicating an ongoing bullish bias.

On the downside, initial support is seen around the nine-period EMA at 0.7071, followed by the 50-period EMA at 0.7029, where a deeper pullback would test the integrity of the current uptrend; below there, horizontal levels at 0.6833 and 0.6400 form a more distant structural floor. On the topside, the next significant hurdle emerges at the horizontal resistance at 0.7278, and a sustained break above this barrier would open the way for a continuation of the broader recovery phase in the pair.

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