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RBA hike risk rises, lifting outlook for Australian dollar

MUFG cites trimmed-mean inflation holding at 3.6% and stronger-than-expected monthly CPI, warning AUD may now look stretched even as it stays supported.

Reported · Written up by our desk · Major Pairs

MUFG told FXStreet that the Reserve Bank of Australia may have less room to delay policy tightening, pointing to the August RBA minutes and a stronger-than-expected monthly CPI as evidence the next rate move could come earlier than markets currently expect.

The firm highlighted that trimmed mean inflation remains unchanged at 3.6%, arguing the RBA is likely to keep focusing on that measure because it failed to slow as expected.

MUFG also said the Australian dollar should still benefit in current market conditions, but it cautioned that the currency is starting to look stretched as the balance of risks shifts.

The note was issued alongside FXStreet market commentary, including coverage of AUD-related positioning and broader expectations for upcoming US data that could influence the dollar.

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