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AUD seen vulnerable near 0.7000 as RBA hike expectations grow

ING economists expect the Reserve Bank of Australia to lift rates by 25 basis points, citing a still-hot economy and upside surprises in GDP and inflation.

Reported · Written up by our desk · Major Pairs

FXStreet highlighted ING economists Deepali Bhargava and Lynn Song’s view that the Reserve Bank of Australia is likely to raise rates by 25 basis points, supported by a still-hot economy, a tight labor market, and upside surprises in GDP and inflation. They also pointed to some cooling in the housing market while warning that inflation risks remain skewed higher, with August CPI projected to rise further, driven by diesel and food prices and persistent core pressures.

FXStreet also noted that AUD/USD was flirting with 0.7000, the pair’s lowest level since early August. The outlet said the Australian dollar hit a fresh low during Friday’s Asian session and appeared vulnerable near 0.7000 after breaking below the 200-day simple moving average.

FXStreet connected the currency backdrop to other inflation and rate drivers, saying that against a hawkish Fed, a two-day rally in oil prices is reviving inflation fears and pushing US bond yields.

The brief added that AUD/USD’s weakness is ongoing as it tests the 0.7000 area, with the technical breakdown cited as a key near-term factor.

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