The Australian dollar gained 0.08 percent against the US dollar on Friday, trading around 0.7035. Traders pointed to expectations of further interest rate hikes from the Reserve Bank of Australia after consumer price inflation accelerated to 4.3 percent year on year in September, up from 4 percent in August.
The Australian Bureau of Statistics released the figure on Wednesday, slightly above the 4.2 percent that markets had expected. Money markets now assign roughly an 80 percent probability to a rate increase at the RBA’s November 3 meeting, according to the ASX RBA Rate Tracker. That would take the cash rate to 4.85 percent.
Fed holds, focus shifts to pace
The Federal Reserve left its benchmark rate unchanged on Wednesday, within a range of 3.75 to 4.00 percent, and said incoming data would shape its next decisions. Richmond Fed President Thomas Barkin said a gradual approach to rates remained appropriate. The direction of policy was fairly clear, he said, but the pace of adjustments was the key question.
Barkin also pointed to cost pressures across US businesses and to heavy investment in artificial intelligence as additional sources of inflation. US annual inflation stood at 3.7 percent in September, near its 31-day high.
Technical levels in focus
On the one-hour chart, the pair has been trading above its 100-period and 200-period moving averages, at 0.7032 and 0.7026. Immediate resistance sits at 0.7040. RBA Governor Michele Bullock has indicated that the inflationary pressures that concerned the bank were beginning to emerge.
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Source: Federal Reserve · Australian Bureau of Statistics | Data: FRED — St. Louis Fed · Swissquote
