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Australian dollar rises as hawkish RBA bets firm
AUD/USD was around 0.7197, near mid-May levels, after upside Australian inflation data reinforced expectations of RBA hikes in September or later.
The Australian dollar gained versus major peers on Thursday, helped by expectations for a more hawkish Reserve Bank of Australia outlook following upside Australian inflation data, according to FXStreet. A softer US dollar also added support to the move.
At the time of writing, AUD/USD traded near 0.7197, levels last seen in mid-May. Stronger-than-expected inflation has strengthened the case for the RBA to raise rates as soon as September, after the central bank left the cash rate unchanged at 4.35% at its August meeting.
FXStreet noted Reuters reporting that three of Australia’s four major banks now expect another RBA rate hike this year. NAB is forecasting a 25-basis-point increase in September, while Commonwealth Bank and ANZ expect the next move in November, with Westpac looking for no change.
On the US side, the latest PCE inflation data released on Wednesday did not shift expectations for the Federal Reserve’s September meeting, with traders focusing on core PCE being in line with forecasts. FXStreet also pointed to the CME FedWatch Tool showing about a 62.0% chance the Fed will leave rates unchanged, as the market looks ahead to Fed Chair Kevin Warsh’s speech at the Jackson Hole Symposium on Friday and additional US data, including a preliminary Nonfarm Payrolls benchmark revision and University of Michigan consumer survey releases.