Australian Dollar hits three-week high as hawkish RBA gives boost

The Australian Dollar rises for the fourth consecutive day, reaching its highest level since late September.
Hawkish comments from Australian central bank officials reinforce expectations of another interest rate hike.
Geopolitical tensions and expectations of tighter monetary policy in the United States support the US Dollar but fail to halt the pair's advance.

Ghiles Guezout FXStreet

AUD/USD extends its gains on Wednesday, rising 0.42% to trade around 0.7025 at the time of writing. The pair records its fourth consecutive day of gains, reaching a fresh three-week high after rebounding from its lowest level since early July, below 0.6900, last week. The Australian Dollar (AUD) benefits mainly from hawkish comments by several Reserve Bank of Australia (RBA) officials, which reinforce expectations of further monetary tightening.

RBA Assistant Governor Christopher Kent said on Monday that several factors suggest neutral interest rates are rising, both in Australia and globally. These comments fuel speculation that Australian monetary policy could remain restrictive for longer than previously expected.

On Wednesday, RBA Deputy Governor Andrew Hauser also warned that underlying inflation, measured by the trimmed mean, could exceed expectations in the third quarter. This prospect strengthens expectations of a potential interest rate hike at the next monetary policy meeting, scheduled for November 3.

The Australian Dollar also benefits from encouraging economic data from China, Australia's largest trading partner. China's third-quarter Gross Domestic Product (GDP) exceeded market expectations, easing concerns about growth in the world's second-largest economy and supporting the outlook for demand for Australian exports.

On the US side, the US Dollar (USD) benefits from several supportive factors but struggles to limit AUD/USD's advance. Hopes for a resumption of peace talks between the United States and Iran weigh on safe-haven demand, while persistent uncertainty in the Middle East continues to keep investors cautious.

Investors now await the release of preliminary global Purchasing Managers' Index (PMI) data on Friday, ahead of next week's Federal Open Market Committee (FOMC) monetary policy meeting.

RBA hawkish shift lifts rate hike odds as Aussie Dollar support meets AI trade wobble

Analysts at MUFG note that the Australian rates market “has moved overnight to price in a higher probability of another RBA rate hike before the end of this year” following hawkish remarks from RBA Deputy Governor Andrew Hauser. Hauser warned that the inflation outlook now looks “materially worse” than the RBA’s August forecasts, highlighting that “we’re seeing higher AI prices, tech prices feeding through into CPI… and we’re having a boom in data centre construction here in Australia as well, so that’s upside too, and then on domestic capacity pressure.”

He also expressed concern that “inflation has been high for a very long time now, and we are beginning to see some signs that people in the community are not sure if we’re going to bring inflation back to target, or certainly not for an extended period.” According to MUFG, these hawkish comments have prompted market participants to “price in closer to a 50:50 probability of another RBA hike next month.”

AUD/USD technical analysis

In the one-hour chart, AUD/USD trades at 0.7028. The pair holds above the 100-period simple moving average (SMA) at 0.6975 and the 200-period SMA at 0.6973, keeping the near-term bias constructive while it respects the rising trend-line support around 0.7018. The Relative Strength Index (14) near 60 suggests steady bullish momentum rather than overbought excess as price consolidates just under the immediate ceiling.

On the topside, initial resistance is aligned with the horizontal barrier at 0.7040, and a sustained break above this level would open the way for further intraday gains. On the downside, nearby support is clustered at the trend line and horizontal levels at 0.7018 and 0.7014, ahead of secondary protection at 0.6994; below that, the 100-period and 200-period SMAs at 0.6975 and 0.6973 provide a deeper structural floor for the bullish setup.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

(This story was corrected on October 21 at 16:25 to correct a misspelling of the RBA Deputy Governor's name, Andrew Hauser.)

Author

Ghiles Guezout

FXStreet

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

AUD/USD challenges four-week highs beyond 0.7000

AUD/USD continues its march north, this time leaving behind the key 0.7000 hurdle and trading at shouting distance from multi-week tops. The persistent recovery in spot comes amid further losses in the Greenback amid extra improvement in the risk complex.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold advances modestly; targets $4,150

Gold prices manage to reverse three consecutive daily declines, trading just below the $4,150 mark per troy ounce on Wednesday. The precious metal’s recovery comes amid a slight drop in the US Dollar, mixed US Treasury yields across the board and a widespread cautious tone from the US-Iran front.

XRP and XLM regain momentum as derivatives activity picks up

Ripple and Stellar are regaining momentum on Wednesday, mirroring gains across major digital assets. XRP has climbed above $1.36, while XLM has reached $0.1854, reinforcing support levels recently tested. This gradual price increase comes amid sticky inflation in the United States and ahead of the Federal Reserve’s monetary decision next week.

What the midterm elections mean for Treasury yields, the Dollar and Gold

Democrats are priced to take the House, so November 3 comes down to the Senate and how much Washington can borrow without the other party. Treasury yields will show the answer first, then the Dollar and Gold. On November 3, Americans vote for all 435 House seats and 35 Senate seats. For bond prices, the result comes down to one thing: how much the government will borrow over the next two years.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.