Aussie Slips Toward 0.70 Despite Rising RBA Hike Bets

Key Moments

RBA Hawkish Shift Fails to Lift AUD

The AUD/USD pair is trading softer near 0.7015 during the early Asian session on Thursday, with upside momentum fading around the 0.70 handle. A risk-off tone in broader markets is channeling flows into safe-haven assets, offering support to the US Dollar (USD) at the expense of the Australian Dollar (AUD). Market participants are also awaiting the release of weekly US Initial Jobless Claims later on Thursday for fresh direction.

On the domestic front, expectations for a more aggressive Reserve Bank of Australia (RBA) policy stance have intensified following comments from RBA monetary policy board member Andrew Hauser. On Wednesday, Hauser stated that the inflation outlook was “materially worse” in the coming months, reinforcing the prospect of additional tightening.

According to the Guardian, the implied probability of a rate hike at the RBA’s November policy meeting rose to 45%, up from 30% prior to Hauser’s remarks. If the central bank proceeds, it would mark the fifth rate increase this year and lift the Official Cash Rate target (OCR) to 4.85% from the current 4.6%, putting it at the highest level since the global financial crisis.

Geopolitical Risks Bolster Safe-Haven Demand

Safe-haven positioning is also being supported by renewed geopolitical tensions in the Middle East. An Iranian official threatened to target US political figures if American strikes resume, according to Fars News, signaling a notable escalation in Tehran’s rhetoric. Separately, the Saudi-led coalition reported early Wednesday that it intercepted and destroyed five drones launched toward Saudi Arabia.

These developments are adding to risk aversion and helping underpin the Greenback, creating a potential headwind for AUD/USD even as RBA hike expectations increase.

Market Repricing After Hauser’s Inflation Warning

RBA hike odds have firmed further following commentary from RBA Deputy Governor Andrew Hausner, as highlighted by analysts at MUFG. They note that the Australian rate market has adjusted “to price in a higher probability of another RBA rate hike before the end of this year” after his hawkish tone.

Hausner cautioned that the inflation outlook appears “materially worse” than the RBA’s August projections, pointing to “higher AI prices, tech prices feeding through into CPI…and we’re having a boom in data centre construction here in Australia as well, so that’s upside too, and then on domestic capacity pressure”.

MUFG also underscored Hausner’s concern that “inflation has been high for a very long time now, and we are beginning to see some signs that people in the community are not sure if we’re going to bring inflation back to target, or certainly not for an extended period”. The bank observed that these comments have encouraged markets to price in “closer to a 50:50 probability of another RBA hike next month”.

Fed Signals Caution While Maintaining Hawkish Stance

On the US side, Federal Reserve communication continues to point to a restrictive policy bias. Fed Chair Warsh delivered what was described as a moderately constructive yet cautious message. The FXS Speechtracker score of 5.6/10 came in below the historical average of 6.1/10, indicating slightly reduced conviction relative to the established baseline.

Warsh acknowledged being “over-scarred from the Global Financial Crisis”, highlighting a persistent risk-averse posture even as he pointed to a structural upswing in growth and investment underpinned by “good policies”. He refrained from making firm commitments on policy decisions for October and December, keeping options open.

His remarks emphasized artificial intelligence (AI) as a near-term demand shock and a prospective support for data confidence, while maintaining vigilance around uncertain labor-market implications and potential financial stability concerns.

Despite the softer Speechtracker reading, the FXS Fed Sentiment Index was unchanged, holding at 127.51 after a move of 0.00 points. This level remains firmly in hawkish territory and suggests markets continue to assume a restrictive reaction function from the Fed. Warsh’s focus on output, employment, inflation, and tail risks reinforces a bias toward keeping policy tight rather than signaling a near-term pivot.

Technical Picture: AUD/USD Constrained Below 100-Day SMA

From a technical standpoint, AUD/USD is trading just beneath the 100-day simple moving average (SMA) and the upper Bollinger band on the daily chart, keeping upside attempts in check. The midline of the Bollinger bands is providing nearby support.

The 14-day Relative Strength Index (RSI) stands around 51, indicating mildly constructive but still indecisive momentum, consistent with a neutral short-term outlook as the pair oscillates around the 0.70 level.

On the topside, the 100-day SMA and upper Bollinger band, both near 0.7035, form a tight supply zone that buyers would need to clear to unlock further gains. On the downside, initial support is concentrated around the Bollinger middle band near 0.6975, with the lower band at approximately 0.6915 acting as a more substantial floor should selling pressure re-emerge.