AUD/USD: RBA hike expectations support pair – Commerzbank
Commerzbank strategists note AUD/USD held at 0.7200 on Friday and gained modestly over the week as markets price further Reserve Bank of Australia (RBA) tightening. Overnight index swaps imply a high probability of a third consecutive 25 bp hike to 4.35% and additional tightening by year-end.

Commerzbank strategists note AUD/USD held at 0.7200 on Friday and gained modestly over the week as markets price further Reserve Bank of Australia (RBA) tightening. Overnight index swaps imply a high probability of a third consecutive 25 bp hike to 4.35% and additional tightening by year-end. They attribute this to inflation staying above target, driven by fuel costs and resilient domestic demand.

Market leans to further RBA tightening

"AUD/USD was unchanged at 0.7200 last Friday but gained 50 pips last week."

"The Reserve Bank of Australia (RBA) meets tomorrow."

"The OIS market is pricing in a 74% chance of a third consecutive 25bp hike to 4.35%."

"They are pricing in a total hike of 64bp by year-end."

"The main reason is due to elevated inflation, which is expected to stay above the 2-3% target band, driven by higher fuel costs and resilient domestic demand."

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

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