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Australian dollar holds near 0.7020 as RBA hike expectations weigh
AUD/USD was around 0.7020, while markets largely priced in a 25 basis point RBA rate increase set for Tuesday.
FXStreet reported that AUD/USD was trading around 0.7020 on Monday, virtually unchanged on the day.
The Australian dollar was supported by expectations for further monetary tightening from the Reserve Bank of Australia, where a rate hike at its meeting on Tuesday is widely expected. FXStreet said the RBA is expected to raise its Official Cash Rate by 25 basis points, from 4.35% to 4.60%, which would lift Australia’s benchmark rate to its highest level in 15 years and mark the fourth rate hike this year.
FXStreet also noted that while the decision could have limited near term impact because markets have largely priced in a 25 basis point increase, investors are likely to focus on the RBA’s guidance for the future path of rates.
On the US side, the report said the US dollar retains support from elevated US Treasury yields, after the Federal Reserve raised its policy rate by 25 basis points in September to a range of 3.75% to 4.00% and signaled further tightening may be needed to bring inflation back toward its 2% target.