The AUD/USD pair trades near 0.6810 as investors weigh a widening policy divergence between the Federal Reserve and the Reserve Bank of Australia. While the RBA recently lifted rates to 4.85%, markets anticipate further Fed tightening, with focus shifting to today's US October PPI release, where headline inflation is expected at 6.6% YoY.
Bearish
🤖 65%
The Fed is seen as more hawkish than the RBA: markets price a possible 50-bp December Fed hike after Waller's comments and Williams' hawkish speech, while the RBA, despite raising to 4.85%, is viewed as done hiking. This widening policy divergence favours the USD over the AUD, and price already sits below the 100-day SMA at 0.7025 with RSI near oversold. Today's US October PPI (consensus 6.6% YoY headline, 5.0% core) is the immediate risk: a hot print would push the pair lower.
Catalysts
- ▼ US October PPI release later on Friday, consensus 6.6% YoY headline and 5.0% YoY core
- ▼ Growing bets on a 25-50 bp Fed rate hike in December after hotter US inflation and Waller's comments
Risk Factors
- ▲ RSI at 33.41 approaching oversold, so downside is somewhat stretched and a close above 0.6962 could trigger a corrective rebound
- ▲ Australian November inflation expectations at 5.3%, over double the RBA target, could revive RBA hike expectations and support AUD