The Australian dollar strengthened toward $0.71 on Tuesday, extending gains from the previous session, as the Reserve Bank of Australia delivered its first back-to-back interest rate hikes since mid-2023. The central bank raised the cash rate to 4.1%, marking a second consecutive month of hike and reversing two of last year’s cuts. The move underscores the RBA’s ongoing struggle to rein in persistent inflation, which has been fueled by rising energy costs amid escalating tensions in the Middle East. Markets also expect another rate hike in May, which could lift the cash rate to 4.35% and fully reverse the 75 basis points of cuts enacted during last year’s six-month easing cycle. Investors will be closely watching RBA Governor Michele Bullock’s post-meeting press conference for hints on the bank’s future policy direction. Attention will then turn to Thursday’s labor market data, which investors will scrutinize after Governor Bullock recently noted that it remains tight.