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Harper and minimum wage uplift offer supportive tailwinds for Aussie's rally.
The Australian dollar advances against all G10 peers following comments from a prominent policymaker warning that further rate hikes might be needed to ensure the Reserve Bank of Australia maintains a grip on inflation.
The RBA's Ian Harper said Tuesday "strong action" would be required if Aussie inflation expectations became de-anchored.
The comments are an admission that the RBA would be ready to raise interest rates again in the event of future inflation data surprises.
For markets, the commitment to "strong action" was more aggressive than might have been expected, which would explain the Aussie dollar's strength.
"The combination of early risk session risk resilience and or monetary policy rhetoric witnessed the prospect of AUD/USD testing the 29 May high at 0.7201," says Jeremy Stretch, Chief Global Strategist at CIBC Capital Markets.
AUD/USD rose to 0.7179 on the day, while GBP/AUD retreated to 1.8769. The Aussie unit was up against all its peers:
The Australian dollar is one of 2026's star FX performers, a performance that has been aided by a solid global equity rally and strong demand for Australia's commodity exports. A solid domestic economy and resultant inflationary pressures have meanwhile prompted the RBA to raise interest rates on three occasions.
Those rate hikes have fuelled a rise in Aussie interest rates, which in turn attracts inflows of foreign capital to Australia, bolstering the domestic currency.
Wage Settlement Underscores RBA Challenge
Also on the day, Australia's Fair Wage Commission announced that roughly 21% of Australian employees are set to receive a 4.75% increase to the minimum wage to A$26.44 from 1st July 2026.
That's below the 6% that the ACTU (Australian Council of Trade Unions) were pitching and above the 3.50% increase the ACCI (Australian Chamber of Commerce and Industry) were willing to pay.
Economists warn that solid domestic wage increases will conspire with Middle East-fuelled price rises to underpin above-target inflation rates, potentially pushing the RBA into further rate hikes.
"While today's decision does not put a June hike on the radar, it does little to help the RBA get on top of inflation," says a response note from TD Securities, the global investment bank.
