Solid Gold Berjangka – The AUD/USD pair saw limited movement during Asian trading on Friday (October 23), failing to extend its rebound from below the 0.7000 level seen in the previous session. Despite some volatility, the pair remains near its monthly high and is on track to post a solid weekly gain.
The Australian dollar continues to draw support from hawkish remarks by Reserve Bank of Australia (RBA) officials. RBA Assistant Governor Christopher Kent suggested that the neutral interest rate may be rising, while Deputy Governor Andrew Hauser warned that third-quarter "trimmed mean" inflation could come in higher than anticipated. These factors have sustained expectations for an interest rate hike ahead of the RBA’s meeting on November 3.
Additional support stems from China’s economy, which grew by 4.5% year-on-year in the third quarter—an improvement from the 4.3% growth recorded in the previous quarter. This stronger-than-expected performance has bolstered sentiment toward the Australian dollar, given the close trade ties between the two nations.
However, gains in the AUD/USD pair have been tempered as the US dollar begins to recover from a three-week low. Although Federal Reserve officials have signaled no immediate urgency to raise interest rates, the market is still pricing in an approximately 80% probability of a rate hike in December. Meanwhile, inflationary concerns—driven by high oil prices and tensions in the Middle East—have bolstered demand for the US dollar as a safe-haven asset.
Investors are now awaiting next week’s Federal Reserve policy decision for clearer direction. Beyond the FOMC meeting, the preliminary third-quarter US economic growth data and the Personal Consumption Expenditures (PCE) price index will be key focal points. These figures will likely determine whether the US dollar strengthens further or if the AUD/USD pair can sustain its upward trend. (srh)