Australian Dollar steady, RBA’s Hauser says rates could move either way

The Australian dollar is calm on Monday. In the European session, AUD/USD is trading at 0.6689, down 0.18%. The Aussie posted its third straight losing week and has declined 3.2% in October. On the data calendar, there are no US or Australian economic releases.

RBA’s hauser: Policy could move in either direction

The markets are trying to get a feel for when the Reserve Bank of Australia might make a rate move. The RBA has held rates at 4.35% for close to a year and has been hawkish in its stance, as board members have considered the possibility of rate hikes at recent meetings.

Traders are betting that the RBA’s first move will be a rate cut, but not until early next year. The September employment report was stronger than expected, which has eased the pressure on the RBA to lower rates. RBA Deputy Governor Andrew Hauser said on Monday that he was surprised that job growth has been so strong. Hauser noted that inflation remained too high and that the RBA could make a rate move in either direction. A rate hike would make the RBA an outlier among the major central banks, most of which are in a rate-cutting cycle in response to falling inflation.

The two key factors with regard to rate policy are inflation and employment and neither one supports the case for a rate cut. Inflation rose to 3.8% in the second quarter, up from 3.6% and close to double the central bank’s target of 2%, while the labor market remains strong. The RBA won’t be in a position to consider a cut until it sees lower inflation and a weaker employment data. The next rate meeting is on November 5 and the RBA is widely expected to stay on the sidelines.

AUD/USD technical

• AUD/USD pushed below support at 0.6745 and 0.6720 earlier. Next, there is support at 0.6692.

• There is resistance at 0.6773 and 0.6798.