Aussie inflation jump to 4.3% lifts rate-hike bets, AUD/USD near 0.7035
Australian CPI accelerated to 4.3% year-on-year in September, above the 4.2% forecast, pushing markets to price an 80% chance the RBA raises rates to 4.85% on November 3. AUD/USD edged up 0.08% to trade around 0.7035.
The Australian Bureau of Statistics reported on Wednesday that annual inflation picked up from 4% in August, marking a second straight monthly acceleration. The reading came in above market expectations and has narrowed the Reserve Bank of Australia’s (RBA) scope to leave borrowing costs unchanged.
RBA Governor Michele Bullock added to the hawkish tone, saying the price pressures policymakers had been watching for were now showing up in the data. Her comments reinforced bets on a hike at the central bank’s next meeting.
The ASX RBA Rate Tracker now shows an 80% probability of a move to 4.85% next week, up sharply from 60% before the inflation release. That repricing has helped the Australian Dollar hold firm against the US Dollar.
On the other side of the pair, the Fed left its policy rate unchanged at 3.75%-4.00% on Wednesday, saying future decisions would depend on incoming data. Richmond Fed President Thomas Barkin said on Friday that a gradual pace of rate moves still made sense, though the timing of further steps remained the open question. He also noted that US firms are facing broader cost pressures, partly tied to heavy investment in artificial intelligence infrastructure, which is feeding into prices.
With the Fed cautious and the RBA leaning toward tightening, AUD/USD has found support near 0.7035 ahead of the RBA’s November 3 decision.
For Praevis readers, a hotter Australian CPI print raises the odds of higher interest rates in Australia, which tends to support the Australian Dollar against the US Dollar, while a steady Fed keeps the broader dollar outlook data-dependent.
Source: FXStreet