RBA

The RBA is holding firm on rates, but with inflation concerns still high and the US election looming, what’s the next move for the Aussie dollar? As bonds take a beating and AUD/USD edges higher, here’s how both domestic policy and global events could shape the outlook.

The Reserve Bank of Australia (RBA0 is expected to keep the cash rate at 4.35% for eight straight meetings.

Underlying inflation remains uncomfortably high in Australia. With continued strength in hiring keeping labour market conditions tight, it means the prospect for RBA rate cuts in 2024 is now remote. For AUD/USD and AUD/JPY traders, external factors are likely to dictate direction from now until year-end, especially the Federal Reserve rates outlook and US election.

Australia’s Q3 inflation report is the sole remaining domestic data release that could meaningfully influence the outlook for interest rate settings from the Reserve Bank of Australia (RBA) this year, making Wednesday’s report a key event for AUD/USD and ASX 200 SPI futures traders.

AUD/JPY looks to Wall Street for its next directional move while NZD/USD is down for a fifth day ahead of tomorrow's RBNZ meeting. But if they fail to deliver a dovish 50b cut, it could prompt profit taking from bears and weigh further on AUD/NZD.

An upside surprise on ISM services helped slow the bleeding on US stock markets and AUD/USD erase heavy losses ahead of todays RBA meeting. Nikkei futures rose 6% after its 12% plunge, which brings hopes for a bounce on the ASX 200 today.

Two RBA speeches and a monetary policy decision along with updated RBA forecasts are the highlights of the week for AUD/USD traders on the domestic front. Although risk-off tones and an ISM services report could prove to be the bigger drivers.

It has been another volatile week for traders thanks to weaker US economic data, a dovish Fed and a refreshingly hawkish Bank of Japan. ISM services is a key event from the US next week, but apart from that it is mainly second-tier data from the APAC region. And that means appetite for risk might be the main driver for markets next week. But given the larger moves already seen, we may need to lower out expectations for volatility unless a fresh catalyst arrives.

AUD/USD is benefitting from speculation about another interest rate hike from the RBA after a higher-than-expected CPI report and strong retail sales figure - see the key levels to watch from here!

Concerns that headline employment figures could be lagging a worse picture alongside a lack of updated service inflation figures prompted the RBA to hold rates in June. And that makes the quarterly CPI report in a few weeks all the more important.

There is now little doubt underlying inflationary pressures in Australia are accelerating again, increasing the risk the Reserve Bank of Australia (RBA) will be forced to hike interest rates again for the first time since November. AUD/USD, Australian bond yields surge while ASX 200 tanks.