AUD/USD at 0.9735 as Inflation Surpasses Estimate

Australia’s dollar climbed to a four-month high after data showed inflation quickened more than estimated in the third quarter.

Swaps traders see an 85 percent chance the Reserve Bank of Australia will hold its key interest rate at 2.5 percent this year, compared with 54 percent odds estimated at the end of last month, data compiled by Bloomberg show. The Aussie and New Zealand dollars gained yesterday after a U.S. report showed a slower-than-forecast increase in jobs, fanning speculation the Federal Reserve will put off reducing monetary stimulus.

Today’s CPI report “reinforces markets’ belief that the RBA will stay on hold and is done cutting rates for now, and that is positive for the Australian dollar,” said Divya Devesh, a foreign-exchange analyst in Singapore at Standard Chartered Plc. The currency is “probably getting a little bit out of their comfort zone, so we expect them to come back to a dovish tone and then eventually ease” in the first quarter, he said, referring to the RBA.

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.