Aussie Dollar Hits One-Month High Near 0.7050 as Hot CPI Lifts RBA Hike Bets; Fed Holds
| Pair | Now | Since publish |
|---|---|---|
| AUDUSD | — | — |
| AUDNZD | — | — |
- AUD/USD near 0.7025 in Europe Friday, retreating from a one-month high near 0.7068
- Hot Australian CPI at 4.3% YoY fuels RBA hike bets; TD sees 80% odds for November
- Fed holds rates; strong US Q3 GDP at 3.4% lifts hike chances, but DXY flat near 101.82
- Traders cautious before US midterms; AUD/USD remains below its 200-day SMA
The Australian Dollar climbed to a one-month high against the US Dollar, with AUD/USD touching about 0.7056 on Wednesday and a monthly peak of 0.7068 on Thursday. Support came from September CPI of 4.3% YoY (up from 4.0% and above the 4.2% forecast), with monthly CPI at 0.8% versus 0.7% expected. Trimmed mean inflation also stayed above the RBA’s 2-3% target.
The data lifted RBA tightening expectations. Futures reportedly raised the implied odds of a November move to 4.85% and priced in another hike in Q1, and ING expects a 25bp hike on 3 November, with a near-term AUD/USD move to 0.710. Brown Brothers Harriman noted AUD/USD had failed to clear its 200-day moving average, while the pair did break above the 100-day SMA.
The Fed held rates at 3.75%-4%, with Governor Lisa Cook and Cleveland Fed’s Beth Hammack dissenting in favor of a 25bp hike. Fed Chair Kevin Warsh said officials stand ready to act as needed, and markets took the outcome calmly. On Thursday the US Dollar Index recovered to about 102.20 ahead of US Q3 GDP and September PCE data, trimming AUD/USD to near 0.7040.
The Aussie also surged against the Kiwi, with AUD/NZD reaching its highest since March 2013 near 1.2600 after the RBNZ unexpectedly held its OCR at 2.75% in a 4-3 vote.
AUD/USD pulled back to about 0.7020 on Thursday after failing at a resistance confluence of the 50- and 200-day SMAs, and a break below 0.7032 is flagged as opening further downside. US data showed the economy grew 3.4% YoY in Q3 2026, above forecasts and the prior readings of 3.2% and 2.2%. The figures reinforced the view of a strong US economy and raised the chances of higher interest rates, and Wall Street closed lower. In Asian hours on Friday, AUD/USD recovered to about 0.7035, supported by hotter Australian CPI: September inflation rose to 4.3% YoY from 4.0% in August, above the 4.2% consensus. RBA Governor Michele Bullock said the price pressures the bank had been concerned about were starting to emerge, which kept rate-hike expectations in place. AUD/JPY fell for a second day to about 110.80 as the Yen strengthened after the Bank of Japan held its policy rate at 1.25%. Ongoing RBA tightening expectations may limit the cross’s downside.
AUD/USD traded subdued at about 0.7025 in European hours on Friday as the US Dollar recovered its early losses and markets turned cautious ahead of US mid-term elections next week. The US Dollar Index (DXY) was almost flat near 101.82. Commerzbank analysts pointed to a divided government and policy gridlock risks following the midterms. TD Securities FX strategist Howard Du said markets already price about an 80% chance of a November RBA rate hike, which limits further support for the Aussie from the RBA. AUD/USD has been trading below its 200-day SMA amid weaker global equity sentiment. TD noted that a broad-based USD selloff after the US midterms could help the pair break above that technical level. The 20-day EMA continues to provide support.