Australian dollar holds above US70 cents after RBA hike

That call matters because the Australian dollar has been behaving more like a rate and positioning trade than a pure China proxy. ING says markets already price only about a one-in-three chance of another hike and are even embedding some easing by end-2027, which limits the risk of fresh dovish repricing in the near term and leaves the currency supported by carry.

Citi is taking the other side, warning that weaker Chinese credit growth and a slowing Australian housing market could swamp the benefit of higher rates. A softer Chinese credit impulse typically points to weaker commodity demand, while a domestic housing slowdown can restrain consumption and increase pressure on the RBA to stay cautious.

The central bank’s own forecasts underline that tension. The RBA now expects growth to remain below trend while headline and underlying inflation stay above 3% until the end of 2027, keeping policy restrictive even without another hike and leaving the door open if price pressures prove sticky.

For investors, the setup is as much about positioning as fundamentals. Citi says leveraged AUD longs remain crowded, meaning any further deterioration in China or housing could trigger a disorderly unwind and pressure the currency despite its income advantage.

The technical backdrop is mixed but still constructive. AUD/USD is near its 50-day and 200-day moving averages around 0.71, while the recent move back above 70 U.S. cents has narrowed the gap toward ING’s target. The next test is whether Chinese lending data and Australian housing stabilize enough to keep carry buyers in control, or whether the market starts to price in a deeper unwind of bullish Aussie bets.