AUD/USD Outlook: Aussie Fluctuates on Rate Hike Speculations

• Westpac economists now predict that Australian interest rates will rise in November.

• The Australian dollar dipped to an 11-month low before recovering.

• Futures indicate a 60% chance of the RBA resuming its tightening cycle in November.

The Aussie danced with uncertainty on hopes of a return of RBA rate hikes, painting a somewhat optimistic brush on the AUD/USD outlook. Westpac economists now predict that Australian interest rates will rise in November. They’ve adjusted their stance due to surprisingly high inflation figures. 

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Notably, Westpac’s Chief Economist, Luci Ellis, believes that the Reserve Bank of Australia will likely boost the cash rate by a quarter point to 4.35% at their next meeting on November 7. This is a change from her previous expectation of a stable outlook.

According to Ellis, inflation is decreasing. However, it is not decreasing rapidly enough for the RBA to keep rates unchanged. She acknowledges that it will be a closely balanced decision. Moreover, there’s still a possibility that they may decide to maintain the current rates.

Meanwhile, the head of Australia’s central bank mentioned that the strong third-quarter inflation report aligns with policymakers’ expectations. Still, they are evaluating whether it justifies a rate increase. RBA Governor Michele Bullock had previously warned that they won’t hesitate to raise interest rates further if there’s a “material” upward revision to the outlook.

Consequently, the Australian dollar dipped to an 11-month low before recovering. Currently, futures indicate a 60% chance of the RBA resuming its tightening cycle in November after four rate pauses. The third-quarter inflation surpassed the central bank’s August forecast, raising concerns about whether the RBA can lower inflation.

AUD/USD key events today

With no reports from Australia, traders will focus on the US, which will release reports on:

• Initial jobless claims.
• GDP.
• Pending home sales.
• Core durable goods orders.

AUD/USD technical outlook: Price retests the 0.6300 key level.

On the charts, the AUD/USD price has had a whiplash move. The price initially broke below the 0.6300 support level before pulling back sharply. Still, the bearish bias remains as the price is below 30-SMA. At the same time, there is support for bearish momentum as the RSI is below 50. 

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However, if bulls close above the 0.6300 key level, they might challenge the 30-SMA resistance and the 0.6350 key level. On the other hand, if the 0.6300 level is strong, bears will likely propel the downtrend to the 0.6260 support level.

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• Source: https://www.forexcrunch.com/aud-usd-outlook-aussie-fluctuates-on-rate-hike-speculations/