AUD/USD edged up around 0.7018–0.7019 in European trade on Friday, with the Australian Dollar supported by firmer market pricing for Reserve Bank of Australia (RBA) tightening later this year. Attention has shifted to inflation after the RBA Deputy Governor warned the outlook was “materially worse” than previously expected and raised concerns about a possible de-anchoring of inflation expectations. Survey evidence pointed to more businesses treating 3–3.5% inflation as the new normal, versus the RBA’s 2–3% target band, while trimmed-mean inflation was last recorded at 3.6%. The next inflation release is due on 28 October; the RBA’s August forecasts pencilled in headline inflation at 3.6% and trimmed-mean inflation at 3.3% by December, with the 3 November meeting in focus if price pressures fail to cool.
Australian Dollar Boosted by Inflation Risks and Policy Expectations
AUD/USD edged up around 0.7018–0.7019 in European trade on Friday, with the Australian Dollar supported by firmer market pricing for Reserve Bank of Australia (RBA) tightening later this year. Attention has shifted to inflation after the RBA Deputy Governor warned the outlook was “materially worse” than previously expected and raised concerns about a possible de-anchoring of inflation expectations. Survey evidence pointed to more businesses treating 3–3.5% inflation as the new normal, versus the RBA’s 2–3% target band, while trimmed-mean inflation was last recorded at 3.6%. The next inflation release is due on 28 October; the RBA’s August forecasts pencilled in headline inflation at 3.6% and trimmed-mean inflation at 3.3% by December, with the 3 November meeting in focus if price pressures fail to cool.
US Dollar Focuses on PMI Data and Fed Rate Outlook
In the US, markets awaited preliminary S&P Global PMI figures for October at 13:45 GMT, as the USD Index rose 0.1% to about 101.75 after touching a three-week low of 101.44 on Thursday. The Federal Reserve is expected next week to keep rates unchanged in the 3.75%–4.00% range. On the chart, AUD/USD held above the 20-day EMA at 0.7001, with RSI at 51.5; support sits near 0.7001 and the 0.7020 pivot.
