Dollar at 101.72 as Australia Raises Rates 25 Basis Points to 4.85%
Key Facts
The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85% on November 3, a move the bank said was made at its meeting that day. The decision came as the U.S. dollar traded at 101.72 points, after falling to a one-month low in the previous session, according to Reuters. Investors counted the U.S. midterm elections and tensions between the United States and Iran among the factors weighing on market sentiment. In Australia, the currency fell 0.3% after the decision, as the market responded to a tone that appeared less hawkish. The picture combines another Australian monetary tightening with a decline in the local currency, while the U.S. dollar traded near its previous level after the prior session’s losses.
The Reserve Bank of Australia raised its rate from 4.60%, which took effect on September 30, 2026, to 4.85%. But the decision was not unanimous among board members; the vote was split 6 to 3. Reuters said the narrow vote margin pointed to the possibility that policymakers were nearing the end of their tightening campaign. The decision thus delivered an actual rate increase alongside a possible signal that there may be less room for further increases. The rate hike did not prevent the Australian dollar from falling, as the market also focused on the significance of the split and the less hawkish tone.
The central bank linked its inflation outlook to price pressures persisting longer than expected, saying inflation was not expected to return to the midpoint of the 2–3% target range before mid-2028. In its November forecasts, the bank projected headline inflation would peak at 4.5% in the December 2026 quarter. It also expected underlying inflation to remain above 3% until late 2027. These estimates set out the backdrop that kept monetary policy under pressure to tighten, despite the split on the board over the rate decision. At the same time, the bank pointed to a gradual expected rise in the unemployment rate from about 4.6% to about 5.1% by the end of the forecast horizon in 2028.
Data from the Australian Bureau of Statistics showed housing approvals rose 5.1% in September to 17,948 dwellings, on a seasonally adjusted estimate. The reading covers September and provides recent context on housing activity ahead of the bank’s November decision. In currency markets, the euro was at 1.1178 dollars, while sterling was steady at 1.3410 dollars and the yen fell to 157.82 per dollar, according to Reuters. Reuters also reported that a drop in artificial intelligence stocks hurt risk sentiment and provided some support for the dollar, amid caution over U.S.-Iran tensions and the midterm elections. The daily reading for the dollar index in closing data was 101.735 points on November 3, compared with 101.67 points on November 2.
Markets are looking to U.S. ADP employment data for October on November 4, with a forecast of 75 thousand jobs in the Trading Economics calendar, and to the ISM services index for the same month, with a forecast of 54.8 points. The official U.S. October jobs report is then due on November 6 at 8:30 a.m. Eastern time, according to the Bureau of Labor Statistics schedule. It follows the September report, which recorded an increase of 29 thousand in nonfarm payrolls and an unemployment rate of 4.2%, with little change in either measure. The releases give investors fresh points to track the U.S. labor market after September’s data, while the implications of Australia’s decision and the path of domestic inflation remain in focus in currency markets.