The Fed Just Hiked Rates for the First Time Since 2023. Here Is What That Means for the AUD, Gold and the ASX

Twelve months ago, the only debate about the Fed in 2026 was how many times it would cut. On September 16, the Federal Reserve answered with a Fed rate hike instead. It lifted rates by 25 basis points to 3.75% to 4% in a unanimous vote. That is its first increase since July 2023, and it caught many traders positioned the wrong way.

The bigger surprise was the forecast attached to the decision. 16 of 18 officials now expect at least one more hike before the year ends, which means the tightening cycle may have only just started.

For Australian traders, the Fed decision is only half the story. The RBA meets on September 29, and markets price close to a 90% chance that it hikes too.

This article breaks down what the Fed decided, why it moved, and what it means for the AUD/USD, gold and the ASX 200. 

A Fed rate hike is when the Federal Reserve raises its benchmark federal funds rate, and on September 16 it lifted that rate by 25 basis points to 3.75% to 4% in a 12 to 0 vote, its first hike since July 2023.

The unanimous vote matters more than it looks. At the July meeting, three officials dissented in favour of a hike while the majority held steady.

By September, the rest of the committee had come around to their view. The statement described economic activity as solid and said inflation remains elevated.

Fed Chair Kevin Warsh was blunt at the press conference. He said inflation is too high and has been for too long, a clear signal that the committee is not done.

The dot plot backed that message up with numbers. According to the Fed's updated projections, 12 of 18 officials see one more hike this year, four see two more, and only two see none.

Warsh himself does not submit a dot, so the chart reflects the rest of the committee. The median year end projection now sits at about 4.1%, which implies at least one more 25 basis point move in October or December.

That guidance changes the outlook for every market tied to the US dollar. Traders who spent the first half of 2026 preparing for cheaper money now have to price the opposite scenario.

In March, the Fed still projected one rate cut for 2026. Six months later, the direction has reversed completely, and energy is the main reason why.

Tension around the Strait of Hormuz has pushed oil prices sharply higher through the northern summer. Brent crude settled at US$108.75 the day before the decision, after Saudi Aramco cancelled September cargoes to Europe.

Higher fuel costs feed straight into transport, freight and household bills. That pushed inflation expectations up at the exact moment the Fed hoped they would settle.

Bond markets saw the move coming well before the announcement. The US 10 year Treasury yield hit 5.04% on September 15, its highest level since 2007.

By the morning of the decision, futures markets priced the hike at around 94% odds. The move itself was not a shock, but the hawkish dot plot that came with it was.

The Fed also faces a credibility test. Inflation has run above its 2% goal for years, and officials appear unwilling to risk another surge by waiting too long to respond.

The Australian dollar trades largely on the gap between US and Australian interest rates. When that gap narrows in favour of the US, capital tends to flow toward the US dollar.

Before September 16, the RBA cash rate sat 60 basis points above the top of the Fed's range. The hike cut that advantage to just 35 basis points overnight, which reduced the yield reward for holding the AUD.

The US dollar reacted quickly. It climbed to its highest level since late July, and the AUD/USD slipped below the 0.7100 level in the sessions after the decision.

The pressure has continued this week. The US dollar reached a two month high as traders priced in further Fed hikes.

The AUD/USD now trades at 0.7036, down from above 0.7200 in early September. The 2026 high came in May near 0.7277, while the June low near 0.6865 is the next major support level below current prices.

SELL BUY

For now, the pair is caught between two central banks. A hawkish Fed pulls it lower, while a possible RBA hike next week could pull it back up.

Commodity prices add another layer to the story. The AUD often tracks demand for Australian exports, so any slowdown in global growth caused by higher US rates could weigh on the currency as well.

Gold usually struggles when interest rates rise, because it pays no yield. This time the first reaction was the opposite, and real yields explain why.

Treasury yields had already surged ahead of the meeting. Once the decision landed, yields eased back, and that reversal in real yields gave gold room to rally.

Gold rose 1.2% to around $4,314 the day after the hike. Strong investment demand also cushioned the fall that many traders expected.

Gold backed ETFs took in $18 billion in August, lifting total holdings to a record 4,189 tonnes. That kind of buying does not disappear because of one rate decision.

The rally has since faded as the US dollar climbed. Gold now trades at $4,283, having slipped below the $4,300 support that held through most of September.

SELL BUY

The chart shows how far gold has pulled back from its highs. It peaked near $4,700 in late August and set a record above $5,500 in February.

Technical analysts now watch $4,150 as the next downside target if selling continues. A move back above $4,300 would ease that pressure and suggest the breakdown was a false signal.

The local share market took the Fed decision calmly. The ASX 200 closed up 0.4% at 8,732 the day after the announcement.

Under the headline number, sectors moved in different directions. The banks tend to benefit from higher rates, since wider margins can lift their earnings. Commonwealth Bank (CBA) is the largest weight in the index, so its moves carry real influence over the headline number.

Consumer and property stocks face the opposite problem. Higher borrowing costs squeeze household spending and make property debt more expensive to service.

That split is likely to widen if the RBA follows the Fed next week. A local hike would add pressure to rate sensitive sectors while offering some support to lenders.

The index now sits at 8,691, around 600 points below its August record of 9,296.7. That gap shows how much caution has crept into the market since the August highs.

Miners add another variable to the picture. A stronger US dollar and slower global growth can weigh on commodity prices, which matters for an index with heavy exposure to resources.

BHP (BHP) and the other large miners tend to react to shifts in global demand. If higher US rates cool the world economy, resources stocks could face pressure alongside consumer names.

For Australian traders, the RBA decision next Tuesday could move the AUD more than the Fed did. Local inflation data has given the central bank strong reasons to act.

July CPI came in at 3.5%, with the trimmed mean measure at 3.6%. Both readings sit well above the RBA's 2% to 3% target band.

Markets now price about a 90% chance of a hike to 4.60%. All four major banks, NAB, CBA, Westpac and ANZ, expect the RBA to raise rates.

ANZ goes further and expects a second hike in November. RBA Assistant Governor Sarah Hunter and Governor Michele Bullock have both sounded hawkish in recent weeks.

The outcome will reshape the rate gap with the US. A hike would restore the 60 basis point advantage the AUD held before September 16.

A hold would leave the gap at just 35 basis points. With a 90% hike already priced, a hold would likely surprise the market and push the AUD/USD lower.

The RBA statement will matter as much as the decision itself. Traders will look for any hint of a November follow up, since that would shape the AUD outlook for the rest of the year.

The Fed hike and the RBA decision create clear trading setups across three markets. Mitrade offers CFDs on the AUD/USD, gold and the ASX 200, which lets traders speculate on price moves in either direction.

Traders who expect the RBA to hike may consider long AUD/USD positions ahead of September 29. Those who think the RBA will hold may look at short positions instead, since a hold would narrow the rate advantage.

Gold traders are watching two levels closely. A recovery above$4,300 could signal renewed strength, while a break below$4,150 could open the way for deeper losses.

For the ASX 200, the RBA decision will likely drive the next move. Traders can take positions on the index as a whole rather than picking individual stocks.

Central bank days often bring sharp price swings. Mitrade lets traders set a stop loss and take profit directly on the order screen, which helps manage risk when volatility spikes.

New traders can practise first on a free demo account loaded with $50,000 in virtual funds. That allows them to test strategies around the RBA decision before risking real money.

Leverage is capped under ASIC rules, but it still magnifies both gains and losses. Sizing positions carefully matters most on days when two central banks can move the same currency pair.

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