Written and reviewed by Kevin Nerway · Last verified 3 November 2026
Key Takeaways
- The Reserve Bank of Australia raised its Official Cash Rate by 25 basis points to 4.85% on November 3, 2026, marking its fifth rate increase this year.
- Australian Dollar weakened across all major cross pairs, declining 0.25% against the US Dollar to near 0.6975 and registering its largest loss against the Canadian Dollar (-0.29%).
- Acceleration in domestic Consumer Price Index growth to 1.3% in Q3 from 0.6% in the previous quarter drove the monetary policy tightening.
- The central bank warned that inflation is expected to remain above 3% through next year, citing persistent upside risks to price stability.
On November 3, 2026, the Australian Dollar (AUD/USD) fell 0.25% to trade near 0.6975 following the Reserve Bank of Australia's (RBA) decision to increase its Official Cash Rate by 25 basis points to 4.85%. At PropFirmScan, our desk tracked immediate selling pressure across all major Aussie crosses as market participants digested a monetary policy statement that, despite delivering a rate hike, failed to provide a fresh hawkish surprise beyond what had already been discounted.
RBA Hikes Rates to 4.85% Yet Australian Dollar Faces Selling Pressure
The central bank's action represents its fifth 25-basis-point rate increase this year as policymakers battle entrenched price pressures. However, the market reaction followed a classic buy-the-rumor, sell-the-fact pattern. Because the 25-basis-point adjustment to 4.85% was widely anticipated, market positioning shifted toward unwinding long exposure once the decision hit the wires.
From a market mechanics perspective, the Aussie dollar's inability to rally on tighter policy underlines how rate hikes alone do not guarantee currency appreciation when terminal rate expectations are already fully priced into market contracts. When evaluating central bank policy divergence in institutional flows, traders must look beyond the headline rate change to determine whether interest rate differentials are expanding or simply catching up to current market pricing.
Persistent Inflation Forces Fifth RBA Rate Increase of the Year
The policy decision comes directly on the heels of accelerated price data released by the Australian Bureau of Statistics. Third-quarter Consumer Price Index (CPI) growth reached 1.3% quarter-over-quarter, rising sharply from the 0.6% print recorded in the preceding quarter.
In its monetary policy statement, the RBA explicitly noted that ongoing upside risks required additional policy firming:
"With revised inflation outlook and ongoing upside risks, board decides further tightening of financial conditions is necessary to support inflation return to target. Inflation now expected to stay above 3% for next year with rising risk of entrenched higher inflation expectations."
Despite this explicit signal that rates will remain restrictive for longer, macro flows favored rival currencies where growth or policy expectations offered a different yield dynamic.
Market Reaction Across Major Australian Dollar Currency Crosses
The Australian Dollar displayed broad-based weakness across the foreign exchange board. The currency registered its steepest decline against the Canadian Dollar, sliding 0.29%. Drop-offs were consistently observed across all major quote currencies during the session:
- AUD/CAD: -0.29%
- AUD/JPY: -0.24%
- AUD/NZD: -0.23%
- AUD/EUR: -0.22%
- AUD/USD: -0.25% (holding near 0.6975)
- AUD/CHF: -0.20%
- AUD/GBP: -0.19%
For funded traders, evaluating head-to-head prop firm comparison options can reveal which platforms offer competitive spreads on commodity currencies like AUD/CAD and AUD/NZD during volatile rate release windows.
Market Impact Snapshot
| Asset | Direction | Confidence |
|---|---|---|
| AUD/USD | Bearish | High |
| AUD/CAD | Bearish | High |
| AUD/JPY | Bearish | High |
| AUD/EUR | Bearish | Medium |
| AUD/GBP | Bearish | Medium |
| AUD/NZD | Bearish | Medium |
Strategic Implications and Risk Controls for Prop Traders
Trading monetary policy announcements requires strict adherence to risk management parameters, particularly when navigating evaluation models. Sudden shifts in liquidity following rate decisions can trigger unexpected slippage and rapid margin expansion, which severely threatens a trader's max daily drawdown limits.
Proprietary account operators must carefully examine their firm's news event trading policies across prop firms. Many firms restrict opening new positions within a five-minute window surrounding central bank interest rate announcements or adjust leverage requirements dynamically. Failing to comply with these guidelines can lead to immediate challenge disqualification, regardless of total account profitability.
Traders who effectively navigate high-volatility events like central bank decisions often prioritize fast capital turnaround. Checking the payout speed tracker allows active traders to identify firms that process withdrawal requests efficiently following high-volume market events. Furthermore, reviewing evaluation phase pass rates during volatile macro regimes helps set realistic performance expectations for day trading strategies.
Traders utilizing structured fundamental analysis must respect current market regimes. When trading rate decisions within a prop firm framework, managing position sizing and avoiding unverified order layering around major news releases is vital for preserving account capital and staying compliant with firm guidelines on news trading rules.
What to Watch Next in Global Rate Expectations
With the RBA leaving the door open to further tightening due to inflation expectations exceeding 3% next year, upcoming Australian labor market reports and monthly CPI updates will serve as the primary triggers for subsequent market re-pricing.
Traders should monitor whether international rate dynamics-particularly US economic data releases-continue to dominate direction in AUD/USD, or if domestic yield adjustments begin offering support near key technical balance areas.
Frequently Asked Questions
Why did the Australian Dollar fall after the RBA raised interest rates
The Australian Dollar declined because the 25-basis-point rate hike was already priced into the market prior to the announcement. Without a fresh hawkish surprise beyond the expected 4.85% cash rate, traders moved to take profits, driving selling pressure across AUD pairs.
What is the new RBA Official Cash Rate after the November decision
The Reserve Bank of Australia raised its Official Cash Rate by 25 basis points to 4.85%. This marked the central bank's fifth interest rate increase of 25 basis points during the current year.
How fast is Australian inflation growing according to recent CPI data
According to the Australian Bureau of Statistics, third-quarter CPI growth accelerated to 1.3% quarter-over-quarter. This represents a noticeable increase from the previous quarter's reading of 0.6%.
Against which major currency did the Australian Dollar decline the most
During the post-announcement trading session, the Australian Dollar posted its largest loss against the Canadian Dollar, falling 0.29%. It also dropped between 0.19% and 0.25% against other major peers including the USD, EUR, GBP, JPY, NZD, and CHF.