AUD Slides Against All Majors as RBA Flags Stagflation Risk

The Australian Dollar fell against every major currency during European trading on Tuesday, 28 July 2026, after Reserve Bank of Australia Governor Michele Bullock warned the domestic economy is slowing and the housing market is cooling faster than expected. The remarks triggered stagflation fears, sending the Aussie down 0.35% against the US Dollar to around 0.6965.

Bullock also cautioned that inflation remains too high and said further interest rate hikes are not off the table. The comments landed one day before the release of Australia's closely watched quarterly inflation figures, leaving traders little room for optimism.

Bullock's Warning Triggers Sell-Off

Speaking on Tuesday, RBA Governor Michele Bullock noted that economic growth is decelerating and the housing market is cooling more sharply than anticipated, while upside risks to inflation persist.

“Inflation is still too high,” Bullock said, adding it is “not impossible for interest rates to rise further.” The dual message of slower growth alongside sticky price pressures revived stagflation concerns among currency traders and prompted a broad sell-off in the Australian Dollar.

AUD Weakest Against the Canadian Dollar

The Aussie underperformed across the board, but its steepest decline came against the Canadian Dollar, making it the weakest pairing among all major currencies during the session.

Against European peers, the Australian Dollar dropped 0.29% versus the Euro, 0.28% against the British Pound, and 0.30% against the Swiss Franc. It also slipped 0.23% against the Japanese Yen, leaving no major counterparty untouched.

Inflation Data and Fed Decision Loom

The slide comes at a pivotal moment. On Wednesday, the Australian Bureau of Statistics is scheduled to release second-quarter and June Consumer Price Index data, with market expectations pointing to annualised readings of 4.1% and 4.0% respectively.

The US Federal Reserve is also set to announce its rate decision on Wednesday and is widely expected to hold rates steady within the 3.50% to 3.75% range. Should Australian inflation print above forecasts while the Fed stays on pause, the RBA may face renewed pressure to act.

What the Slide Means for the Aussie Dollar

Tuesday's broad-based decline underscores how sensitive the Australian Dollar has become to domestic economic signals. Bullock's remarks have shifted the narrative from cautious optimism to stagflation anxiety, and the currency's performance across all majors reflects that pivot.

With inflation data due within hours and the Fed decision following shortly after, the Aussie faces a high-stakes 24-hour window. Any upside CPI surprise could force the RBA into a more hawkish posture, but if growth continues to weaken, the central bank may find itself cornered between rising prices and a slowing economy.