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Australian dollar extends gains as RBA rate-hike odds rise
AUD/USD is around 0.7200 for the fourth straight day, supported by markets pricing about a 50% chance of an RBA hike in September after hotter July inflation.
Australia's dollar extended its winning streak to a fourth straight day, with AUD/USD trading around 0.7200 in Asian hours on Friday, as RBA rate hike expectations strengthened, FXStreet said. The repricing follows a hotter-than-expected July inflation report. Several banks raised cash-rate forecasts, with National Australia Bank expecting the cash rate to reach 4.6% next month, while Commonwealth Bank of Australia and ANZ pointed to November, while noting the possibility of earlier tightening.
Market pricing also shifted, with the probability of an RBA increase at the September meeting rising to roughly 50% from 17% previously, while a November hike remained fully priced, according to FXStreet. Strategists at Societe Generale said the broader FX setup continues to favor higher-yielding currencies as long as US policy keeps Treasury yields in check and US growth holds up, adding that this supports demand for G10's highest-yielding currency, the AUD.
Traders are also watching the Jackson Hole symposium, including an upcoming speech by Federal Reserve Chairman Kevin Warsh for signals on US monetary policy. FXStreet noted AUD/USD's near term bias remains bullish while it stays above the nine- and 50-day EMAs, with the RSI near 70.7 indicating stretched upside momentum.