- AUD / USD recovers 0.7500 amid hawkish RBA expectations.
- Major Australian banks advance their calls for RBA rate hikes.
- Australian yields in April 2024 surge, attention is now on the release of US GDP for the third quarter.
AUD / USD makes a decent return above 0.7500, in a reversal from daily lows of 0.7480, as investors ignore the risky market mood amid rising bets from a previous rate hike by the Reserve Bank of Australia (RBA).
Evidence of the increase in hawkish RBA expectations, the April 2024 Australian bond yield jumped to 0.5%, five times higher than the central bank’s 0.1% target. It comes after the country’s RBA-adjusted average CPI hit 0.7% QOQ in the third quarter, down from 0.5% expected and 0.5% in the last quarter. In addition, the central bank did not buy AU $ 1.6 billion ($ 1.2 billion) of longer-term securities to defend its return target.
Soaring price pressures have fueled RBA rate hike calls, with the Commonwealth Bank of Australia (CBA) pushing forward its rate hike expectations to November 2022 compared to previous bets for a May 2023 hike. The bank said Wednesday’s Q3 CPI data was an inflection point.
However, the pair’s renewed rise may lack follow-up buying as the US dollar remains in the spotlight amid persistent risk aversion. U.S. earnings reports highlighted the supply chain crisis amid continuing mounting price pressures, weighing on investor sentiment.
Investors also remain cautious ahead of the critical third-quarter U.S. GDP release, which could shed further light on the economic recovery as the Fed remains on track to cut its bond purchases next month.