The Australian dollar fell 0.27% against the US dollar on Wednesday, slipping below $0.6850 as markets leaned further into the prospect of additional Federal Reserve tightening. By MacroHerald’s own measurement at 00:05 GMT on 12 November, AUD/USD stood at $0.6845, its lowest in 30 days.
Dollar firms on Fed bets
The US Dollar Index gained 0.67% on the day, reaching an 18-month high of 102.96 before easing back to 102.91. The move followed hawkish comments from Fed officials on Tuesday. Fed Governor Christopher Waller said a 0.3% rise in core CPI could be enough to prompt him to back a 50-basis-point rate hike.
Underlying US inflation rose 0.3% month-on-month in October, the third straight month at that pace, while headline CPI came in at 0.4%, above both the prior reading of 0.6% and estimates of 0.3%. Traders now assign an 87% probability to a 25-basis-point Fed hike in December, against a 13% chance of a 50-basis-point move, according to the CME FedWatch Tool.
RBA seen on hold
Market participants increasingly expect the Reserve Bank of Australia to have finished its tightening cycle. Prime Terminal data point to an expected 28-basis-point RBA rate cut in 2027.
The domestic economic calendar was light on Wednesday. Thursday brings US initial jobless claims, housing data and further Fed speeches, with the US producer price index due Friday.
Technical picture weak
On the daily chart, AUD/USD traded near $0.6844, with resistance seen from a cluster of simple moving averages at $0.7028 and a former rising trend line, now resistance, at $0.6926. The 14-day Relative Strength Index stood at 35, reflecting weak momentum.
Related: Peso slips to 18.63 per dollar as Fed hike odds rise · Aussie firms as RBA hike bets build after 4.3% inflation
Source: Federal Reserve · Reserve Bank of Australia | Data: Swissquote
