Currency watch: AUD/USD of interest for next two weeks?

There are two weeks left until the Reserve Bank of Australia (RBA) decides whether to enact another rate hike (on November 7). And, yesterday’s Australia Consumer Price Index (CPI) might have made the trading in the lead up to this decision more interesting.

The CPI figures show a quarterly inflation increase of 1.2% and an annual increase of 5.4%, raising pressure on the RBA to consider another interest rate hike. But, is the conviction to hike any more really there?

RBA´s newly appointed governor, Michele Bullock, delivered a strong message during her public address yesterday, warning that the bank won’t hesitate to raise interest rates if inflation doesn’t behave itself.

The Commonwealth Bank of Australia and ANZ have both now revised their rate pause view. Both now see a 0.25% hike in November. Similarly, traders are predicting a 65% chance of a rate hike next month too.

The RBA would be one of the very few central banks still hiking, which might add some fuel to AUD bulls (Markets think that both the US Federal Reserve and the European Central Bank are done with hiking).

On the back of higher-than-expected inflation data, the AUD appreciated toward a strong resistance at 0.63995, hitting its strongest levels in almost two weeks. However, sellers came into the market here, and have since pushed the pair below where it started yesterday, keeping its long-term downward trajectory intact.