The Australian dollar rose to 0.7017 against the US dollar, its highest level in two weeks, after Reserve Bank of Australia Deputy Governor Andrew Hauser warned that the inflation outlook appears worse than forecast. Hauser made the remarks at a Citi conference in Sydney. The exact date of the speech was not given.
Hauser said the inflation outlook appears slightly worse than expected. He also said inflation had remained elevated for an extended period. Even so, he argued that monetary policy is working.
Dollar weakness adds to the move
Broad weakness in the US dollar also helped the Australian currency. The US Dollar Index closed at 101.73, down 0.24 percent in the session. Weak US data added to the pressure. ADP’s four-week average of employment change fell to 18.5 thousand jobs from 26 thousand. US pending home sales dropped 7.3 percent in September, far below the consensus estimate of a 0.5 percent decline.
Market pricing points to a Federal Reserve rate hike. Futures put the chance of a hike at the October meeting at 14 percent, and at the December meeting at 89 percent.
Technical levels and the week ahead
On the daily chart, the pair is trading near a cluster of moving averages at 0.7078, the 50, 100 and 200-day averages combined. A rising trend line sits lower, at 0.6917. The Relative Strength Index for AUD/USD stood at 50.18, a neutral reading.
Attention now turns to next week’s Federal Reserve policy meeting. Traders are also waiting for the S&P Global flash PMI readings on October 22. Otherwise, the economic calendar in both Australia and the United States is light.
As of 00:26 GMT on 21 October, MacroHerald’s own market data put AUD/USD at 0.7012. US annual inflation was 3.7 percent in September, near its 31-day high.
Data: FRED — St. Louis Fed · Swissquote
