The Australian dollar rose broadly in European trading on Tuesday against a basket of major currencies, extending its gains for the third consecutive day against its US counterpart and hitting a one-week high, following the hawkish tone from the Reserve Bank of Australia (RBA).

As expected, the RBA decided to keep its cash rate unchanged at 3.60%, the lowest level in almost two and a half years, while voicing caution over elevated inflation during the third quarter of this year.

Price Overview

• Today’s AUD/USD exchange rate: The Australian dollar climbed 0.5% to 0.6609, the highest in a week, from an opening price of 0.6577, with a session low at 0.6571.

• On Monday, the Australian dollar closed up 0.45% against the greenback, marking a second consecutive daily gain, continuing its recovery from a three-week low of 0.6521.

Reserve Bank of Australia

In line with market expectations, the RBA on Tuesday kept its cash rate unchanged at 3.60%, the lowest since April 2023.

The central bank said recent data indicate inflation may prove higher than anticipated in Q3, while the overall economic outlook remains uncertain. It noted that the board deemed it appropriate to maintain caution on monetary policy but remains well-positioned to respond to international developments.

Earlier this year, the RBA cut rates in February, May, and August. With consumer prices running higher than expected, markets now await the full Q3 inflation report due in late October.

Australian Interest Rates

• Market pricing for a 25-basis-point rate cut in November fell from 85% to 55%.

• Investors await further data on inflation, unemployment, and wages in Australia to reassess the odds of another cut.

Opinions and Analysis

• Carol Kong, currency strategist at Commonwealth Bank of Australia, said the RBA’s statement carried a relatively hawkish tone, highlighting tensions in the flow of economic data and last week’s upside surprise in inflation.

• She added: “We still maintain our forecast for a 25-basis-point rate cut in November, but note that it is not guaranteed and depends on the Q3 CPI reading due in late 2025.”

Australian Dollar Performance

The Australian dollar has gained more than 6% year-to-date, benefiting from US dollar weakness and stronger risk appetite. In September alone, the AUD rose a more modest 0.6%, after touching its highest level in 11 months two weeks ago.

At the conclusion of its September 30 meeting, the Reserve Bank of Australia’s monetary policy committee decided on Tuesday morning to keep interest rates unchanged at 3.60%, the lowest level since April 2023, in line with market expectations.

In its August meeting, the RBA had cut interest rates by 25 basis points to 3.60%, resuming the monetary easing cycle that had paused in July.

Today’s decision aims to allow more time to assess economic developments in the country. The statement noted that recent data suggests inflation may be higher than expected in the third quarter, while the broader economic outlook remains uncertain.

•This statement is considered “positive” for the Australian dollar.

The US dollar fell against most major currencies during Monday’s trading as markets closely awaited key economic data due later this week.

This comes amid market concerns over a potential US government shutdown if lawmakers in Congress fail to pass the funding bill before the end of September.

President Donald Trump warned of possible mass layoffs of federal employees if the law is not passed and the shutdown goes into effect.

Investors are closely watching important economic releases later this week, most notably US manufacturing activity data, as well as the monthly employment report due on Friday.

In trading, the dollar index fell by 0.2% to 97.9 points as of 17:19 GMT, recording a high of 98.1 points and a low of 97.7 points.

Australian Dollar

The Australian dollar rose 0.5% against its US counterpart to 0.6578 as of 17:29 GMT.

Canadian Dollar

The Canadian dollar gained 0.1% against the US dollar to 0.7190 as of 17:29 GMT.

From Brussels to Washington, a new wave of enthusiasm for so-called small modular nuclear reactors (SMRs) is sweeping through policy circles, research centers, and energy startups. These compact nuclear units, marketed as plug-and-play solutions, are being pitched as the perfect answer to powering data centers, meeting the surging demand from artificial intelligence, and supporting the energy transition with clean, stable electricity.

But there’s just one problem. In fact, there are many. And none of them are “small.”

The hype cycle in full swing

Today, SMRs are being promoted as the iPhone of nuclear energy: smarter, smaller, cheaper, scalable. A magical fix for everything—from remote grids to decarbonizing heavy industries to feeding AI servers. Countries like the US, Canada, and the UK have rolled out ambitious plans to deploy them. Major companies including NuScale, Rolls-Royce SMR, GE Hitachi, and TerraPower have presented shiny timelines and glowing promises.

But the fine print tells another story.

Not a single commercial SMR is operating anywhere in the world. None has even been built. NuScale, a US pioneer in this space, recently scrapped its flagship Utah project after costs soared above $9,000 per kilowatt and it failed to attract investors. Even the company’s CEO admitted operations wouldn’t start before 2030. Meanwhile, Rolls-Royce’s promised SMR factory hasn’t produced a single steel bolt.

In other words, we are betting on a technology that doesn’t yet exist at scale, won’t arrive in meaningful numbers until the 2030s, and would require thousands of units to make a dent in global energy demand. That’s not strategy—it’s science fiction.

Big reactors haven’t inspired trust either

Even large-scale nuclear projects, which SMRs are supposed to “fix,” are struggling. Take the UK’s Hinkley Point C, once touted as the future of European nuclear power. It is now twice its original budget (over £46 billion), at least five years late, and still facing construction issues. The same French-backed EPR design has suffered similar setbacks in Flamanville (France) and Olkiluoto (Finland), where completion took more than a decade longer than promised and costs ballooned.

Let’s be blunt: if any other energy technology had this track record, we would have laughed it off the table years ago.

Price floors for nuclear, ceilings on common sense

Authorities in France and Finland have now approved guaranteed minimum prices for new nuclear power—essentially handing operators blank checks. In Finland, the floor was set above €90 per megawatt-hour for 20 years. By contrast, solar and wind in European auctions are clearing between €30–50/MWh, with far lower marginal costs.

So why lock ourselves into long-term contracts at higher prices in the name of a “market-based future”? It’s hard to see how this helps consumers, industries, or climate goals. Especially since nuclear plants, like renewables, still require major grid upgrades to handle large-scale generation. No efficiency gains there either.

SMRs: too small, too late

Let’s imagine the best-case scenario: some designs clear regulatory hurdles by 2027–2028, construction begins in the early 2030s, and the first commercial units come online by 2035. Even then, the world would need to build and connect thousands of these SMRs within 10–15 years to displace a meaningful slice of fossil generation. That’s a logistical nightmare—before even touching on public acceptance, licensing hurdles, uranium supply, or waste management.

By contrast, in the time it takes to build one SMR, solar, wind, and batteries could be deployed 10–20 times over, at lower cost, faster timelines, and with no radioactive legacy.

Unlike nuclear, these technologies are already modular, scalable, and proven worldwide—from Australia’s deserts to German rooftops to California’s power plants.

Inside the reactor: waste and risk

Nuclear advocates love to stress how “safe” modern designs are. Yes, statistically, nuclear is relatively safe per kWh. But it is the only energy source that carries a nonzero risk of catastrophic failure—and waste that remains toxic for thousands of years.

So why gamble on this when we have abundant clean energy with zero explosion risk and recyclable or inert waste?

A supporting role, not the main act

To be clear, nuclear will likely continue to play some role in the energy mix for certain countries. France and Sweden have existing fleets. New builds may proceed in China or South Korea, where costs and planning are tightly managed. But for most of the world, especially those racing to decarbonize quickly, new nuclear is not the solution.

SMRs, despite the marketing, won’t save the day. At best, they’ll be a niche technology for specialized cases—remote mines, military bases, or industrial clusters with no alternatives. That’s fine. But let’s stop pretending they’re the silver bullet for energy.

Final word

We are in the decisive decade for climate action. Every euro, dollar, or yuan must deliver the maximum emissions cuts per unit of time and cost. By that measure, SMRs fall short. Nuclear—large or small—is too expensive, too slow, too risky, and too narrow to drive the energy transition.

It’s time to dial down the nuclear hype and double down on the technologies already winning: wind, solar, batteries, heat pumps, grid flexibility, and green hydrogen. These aren’t dreams. They’re being deployed today, by the gigawatt.

SMRs are interesting, yes. But when it comes to decarbonization, we don’t need unicorns—we need workhorses.