The Australian dollar may get limited support from a Reserve Bank of Australia (RBA) rate increase next week, with markets already pricing in high odds of a move, TD Securities FX strategist Howard Du told FXStreet.
The ASX RBA Rate Tracker put the likelihood at 80% on Oct. 29 for a 25-basis-point increase that would lift the cash rate target to 4.85% at the Nov. 3 meeting. Its estimate rose from 60% on Oct. 27 to 82% the following day, then eased. The figures reflect futures market pricing, not an RBA decision. EconoTimes previously reported November rate hike pricing near 56%.
A separate measure cited by ABC News put the chance at 79% using overnight-index-swap pricing shortly after the inflation release on Oct. 28. The readings differ slightly because they use different pricing measures and observation times. The Australian Bureau of Statistics said annual consumer price inflation rose to 4.3% in September from 4.0% in August; trimmed mean inflation increased to 3.6% from 3.5%.
The RBA lifted its cash rate target by 25 basis points to 4.60% on Sept. 29. RBA Governor Michele Bullock said in testimony on Oct. 28 that inflation pressures reflected limits on domestic capacity, higher energy costs linked to the Middle East conflict and technology prices associated with AI demand. She also said inflation had fallen from a 7.9% peak at the end of 2022 and was within the RBA’s 2% to 3% target range for a period in 2024 and 2025, after significant rate tightening in 2022 and 2023.
Bullock said high interest rates can put pressure on households with mortgages. She said persistent inflation weighs particularly on people with lower incomes and limited savings, who have fewer resources to absorb higher costs.
Du also told FXStreet that AUD/USD had remained below its 200-day simple moving average for about a month as global equity sentiment weakened. The RBA is scheduled to announce its next decision at 10:30 p.m. ET Monday, Nov. 2 (2:30 p.m. AEDT Tuesday, Nov. 3). October CPI data are due at 7:30 p.m. ET Tuesday, Nov. 24 (11:30 a.m. AEDT Wednesday, Nov. 25).
