The Australian dollar fell further below $0.687, extending losses to a fresh three-month low as a stronger US dollar outweighed the RBA’s restrictive policy stance. Minutes from the Reserve Bank's June meeting showed policymakers agreed interest rates should remain restrictive to curb excess demand and bring inflation back to the 2%–3% target, while reiterating they were prepared to raise rates further if needed. The board also warned that Middle East tensions continued to pose upside risks to inflation, reinforcing a cautious policy outlook despite slowing economic growth. Despite the hawkish tone, the recent retreat in oil prices have led investors to pare the risk of another rate hike this year to around 40%, with markets also beginning to price in rate cuts as early as mid-2027. Meanwhile, the Aussie remained under pressure from a firmer US dollar after the Federal Reserve adopted a more hawkish stance, prompting markets to price in a 75% odds of a rate hike as early as September.