AUD/USD Outlook: RBA to Maintain Small but Frequent Hikes

• RBA is ready to raise interest rates further in the coming months.
• The RBA plans to deliver small but frequent hikes.
• Australia’s inflation is expected to hit 6.9% in the September quarter.

Today’s AUD/USD outlook is bullish. On Tuesday, the deputy governor of the Reserve Bank of Australia stated that the bank anticipates raising interest rates further in the upcoming months, emphasizing that it may accomplish a similar tightening of rates to its global peers with smaller increases.

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According to Michele Bullock, the 25 basis point change in October was brought on by domestic economic conditions and the fact that the central bank board meets 11 times a year, which is more frequent than most of its counterparts.

“This is a particular advantage in uncertain times, as it allows more frequent evaluation of the evidence and recalibration, if necessary,” said Bullock.

“It also means that if we increase interest rates at every meeting, we can potentially move much faster than overseas central banks.”

The June quarter saw inflation reach a 21-year high of 6.1%, which is believed to have accelerated to 6.9% in the September quarter. This means that the fight against high inflation goes on.

Markets have wagered rates in Australia will need to climb to around 4%, while many economists are projecting a high between 2.85% and 3.6%. This is because of rising inflation and expectations for more aggressive policy action from the US Federal Reserve and other central banks.

AUD/USD key events today

It will be a quiet day for AUD/USD as there won’t be any significant news releases from the US and Australia.

AUD/USD technical outlook: Aussie bulls attempt a takeover above the 30-SMA

The 4-hour chart shows the price trading above the 30-SMA and the RSI above 50. There has been a shift in sentiment from bearish to bullish after the price made a double bottom at the 0.6200 support level. Bulls took control and have managed to push the price above the 30-SMA.

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However, a change in trend can only be confirmed when the price starts making higher highs and higher lows. This would mean going above the 0.6375 resistance level before retesting the 0.6500 key resistance level. Until then, bears can return at any point and resume the downtrend by pushing the price back below the 30-SMA.

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