Australian Dollar: RBA Rate Hike Expected to Provide Little Support – TD Securities

Markets already price an 80% chance of a November RBA rate hike. According to TD Securities FX strategist Howard Du, this leaves limited scope for further Australian Dollar support. Weaker global equity sentiment has kept AUD/USD below its 200-day SMA. A broad-based USD sell-off after the US midterm elections could, however, lift the pair above this key technical level.

80% RBA hike pricing: limited AUD upside, bearish on crosses

"The market currently prices around an 80% chance of a November RBA rate hike."

"Unlike central bank rate hike pricing elsewhere in the world, the market is hesitant to price in more RBA rate hikes in the coming months, in line with our call."

"With the market already pricing in another RBA rate hike in the near term, we would not expect the central bank decision to lend much further support for the AUD."

"AUD/USD has been trading below the 200d SMA for the past month due to softening global equity sentiment."

"A break above the key level is more likely if the USD could see a broad-based relief selloff after the US midterm election."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)