The Australian dollar rose 0.41% on Oct. 21 after Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser warned inflation risks had worsened, while a Commerzbank estimate put November hike odds at 55%.
Reuters reported that the currency reached US$0.7031 against the U.S. dollar. The U.S. dollar index fell 0.14% to 101.65 that day.
Hauser said the RBA’s inflation assessment had weakened since August. He pointed to oil costs, technology prices reaching consumers and limits on domestic capacity. The bank was still preparing its forecasts, he said, and he did not know what the board would decide. EconoTimes previously covered the Australian dollar near US$0.70 in a report on RBA Assistant Governor Christopher Kent’s valuation remarks.
FXStreet reported Oct. 22 that Commerzbank’s Norman Liebke put the implied chance of a rate increase at the Nov. 3 decision at 55%, compared with 24% in the previous day’s estimate. He put the cumulative chance of an increase by year-end at about 90%. Liebke said Commerzbank still expected the RBA to hold rates for now. He added that the Australian dollar could get support if markets priced in more Federal Reserve rate increases than Commerzbank expected.
The latest Australian Bureau of Statistics data showed annual consumer price index (CPI) inflation at 4.0% through August and trimmed mean inflation at 3.6%. The RBA’s August projections put those measures at 3.6% and 3.3%, respectively, for December. The cash rate target is 4.60%, following a 25-basis-point increase on Sept. 29.
Hauser said higher rates weigh on mortgage holders, while inflation particularly harms low-income renters. Australia’s September CPI release is scheduled for Oct. 27 at 8:30 p.m. ET (00:30 UTC Oct. 28). The RBA Monetary Policy Board is scheduled to meet Nov. 2–3, with its decision due Nov. 2 at 10:30 p.m. ET (03:30 UTC Nov. 3).
