Australian Dollar experienced a notable surge following the release of higher-than-anticipated consumer inflation figures. The data illustrates an accelerated quarterly inflation rate for Q3, and a more modest deceleration in the annual inflation rate than projected. Furthermore, the monthly CPI has been on the rise for two consecutive months. Given this backdrop, market participants are now anticipating another 25bps rate hike by RBA in their upcoming November 7th meeting, pushing the rate to 4.35%.
For a deeper understanding, one can refer to the minutes from RBA’s October meeting which highlighted the Board’s “low tolerance” towards unexpected surges in inflation. Adding weight to these expectations, Governor Michelle Bullock made it clear just a day prior, stating, “The Board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation.”
GBP/AUD’s steep decline this week argues that corrective rebound from 1.8854 has completed at 1.9339 already. That came after failure to sustain above 55 D EMA (now at 1.9226). Risk will now stay on the downside as as 1.9339 resistance holds, in case of recovery. Break of 1.8854 support will confirm resumption of whole fall from 1.9967 to 61.8% projection of 1.9967 to 1.8854 from 1.9339 at 1.8651 next.
. Risk will now stay on the downside as as 1.9339 resistance holds, in case of recovery. Break of 1.8854 support will confirm resumption of whole fall from 1.9967 to 61.8% projection of 1.9967 to 1.8854 from 1.9339 at 1.8651 next.){kind=link}