- AUD/USD falls to lowest level since October 2022
- US GDP expected to jump to 4.3%
The Australian dollar has pared losses from earlier today. In the European session, AUD/USD is trading at 0.6303, down 0.07%.
Bullock shrugs off hot inflation
Australian inflation was stronger than expected in the third quarter, raising expectations that the Reserve Bank of Australia might respond with a rate hike after four consecutive pauses. The Australian dollar failed to gain ground on the hot inflation report and declined 0.74% on Wednesday. The Aussie’s downtrend continued on Thursday, as Governor Bullock downplayed the rise in inflation, saying it came in pretty much as expected. The comments pushed AUD/USD as low as 0.6270, its lowest level since October 2022. Bullock remained non-committal about a rate hike in her remarks today, saying the board had not decided if rates had peaked or would further tightening be required to curb inflation.
The future markets have been swinging wildly regarding the probability of a rate hike at the November 7th meeting. Just two weeks ago, the odds of a rate hike were a negligible 5%, with a pause a virtual guarantee. That has changed dramatically and the odds of a rate hike rose up to 80% on Wednesday but have dipped to 68% currently. Significantly, all four major banks now expect a hike, up from none prior to the inflation report.
US GDP expected to jump to 4.3%
The US releases third-quarter GDP on Thursday and the markets are expecting a very strong print. The consensus estimate of 4.3%, compared to 2.1% in the second quarter. This would mark the highest level since Q4 2021, when the economy was in recovery mode from the Covid pandemic. Consumer spending has been strong over the past several months and is expected to drive a strong GDP release.
- AUD/USD has support at 0.6240 and 0.6184
- 0.6343 and 0.6399 are the next resistance lines