AUD/USD Outlook: RBA to Deliver a 25bps Rate Hike in December

• Economists are expecting the RBA to raise rates by another 25bps in December.
• Australia’s inflation fell to 6.9% from 7.3% in September.
• Investors are on the lookout for the US nonfarm payroll report.

Today’s AUD/USD outlook is bullish. All 30 economists surveyed by Reuters predict that on December 6, the Reserve Bank of Australia will increase interest rates by a modest 25 basis points to 3.10 percent. This will mark its third consecutive increase following a string of half-point increases.

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It was anticipated that the central bank, among the last to join the global tightening campaign and the first significant one to switch to smaller movements, would continue down that route during the ensuing months as inflation showed indications of slowing.

Although it decreased to 6.9% in October from 7.3% the previous month, inflation is still much higher than the RBA’s target range of 2%–3%.

According to Marcel Thieliant, a senior economist for Capital Economics in Australia, the consumer expenditure numbers were a little softer than expected, and inflation was down a little. That would indicate that they would adhere to the 25bps hike.

Although consumption was still steady, house prices, vulnerable to higher mortgage rates, exhibited signs of a sustained slowdown.

According to the median estimate, the RBA will increase rates by 50 basis points by the end of the second quarter of 2023, bringing the terminal rate to 3.60%.

AUD/USD key events today

Investors’ focus will be on the US jobs report. The US will release the nonfarm payroll report and the unemployment rate, which will show the state of the labor market.

AUD/USD technical outlook: Wobbling above the broken range

When we look at the 4-hour chart, the price is above 30-SMA, and the RSI is above 50, indicating that the bulls are in charge. The price has been trading within a large rectangle with support at 0.6600 and resistance at 0.6778. The bulls attempted to break above the range resistance twice before finally succeeding on the third attempt.

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Currently, the price has paused and is consolidating above the range resistance. Bulls need to get back in stronger for this breakout to hold and take out the 0.6850 resistance level. However, if bears return and push the price back into the range area, we might fall to 0.6600.

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