Australian Dollar Holds Near 0.70 USD as Investors Await RBA Rate Signals
The Australian Dollar (FX:AUDUSD) remained stable near $0.70, holding above recent multi-month lows as currency investors evaluated the domestic interest rate outlook. The currency was also supported by weakness in the euro, which faced pressure from political developments in France.
Monetary policy expectations remain central to the currency's path. Reserve Bank of Australia Deputy Governor Andrew Hauser is scheduled to speak on Wednesday, potentially offering guidance on the likelihood of a fifth rate increase this year. While central bank officials noted that the labor market might be cooling faster than expected, market pricing currently implies roughly a 33% chance of a rate hike in November and a 56% chance in December.
Attention is now focused on Australia's third-quarter inflation report due on October 28. Quarterly core inflation is expected to rise by 0.9% to 1.0%, which could push the annual rate to between 3.5% and 3.6%—exceeding both the Reserve Bank of Australia's 2% to 3% target range and its 3.3% forecast. Central bank Governor Michele Bullock and other officials are set to address lawmakers on the same day.
Key points
- The Australian dollar held near $0.70, staying clear of recent multi-month lows.
- RBA Deputy Governor Andrew Hauser speaks on Wednesday, which could offer insights into potential rate hikes.
- Markets currently price in a 33% chance of an RBA rate increase in November and a 56% chance in December.
- Third-quarter core inflation, due October 28, is expected to rise 0.9% to 1.0% quarter-over-quarter.
- Annual core inflation could reach 3.5% to 3.6%, exceeding the central bank's target range of 2% to 3%.
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Why is the Australian dollar holding near 0.70 USD?
The Australian dollar is maintaining recent gains above multi-month lows as investors anticipate upcoming Reserve Bank of Australia speeches and inflation data, alongside support from a weaker euro.
When is the next Reserve Bank of Australia rate decision signal expected?
RBA Deputy Governor Andrew Hauser is scheduled to speak on Wednesday, while the third-quarter inflation report and Governor Michele Bullock's testimony before lawmakers are set for October 28.
What are the expectations for RBA interest rate hikes in 2026?
Financial markets currently price in approximately a 33% chance of a Reserve Bank of Australia rate hike in November, with the probability rising to 56% for December.