Australian Dollar: RBA hike seen offering limited support – TD Securities

TD Securities FX strategist Howard Du notes that markets already price an 80% chance of a November RBA rate hike, limiting further support for the Australian Dollar. AUD/USD has been trading below its 200-day SMA amid weaker global equity sentiment, although a broad-based USD selloff following the US midterm elections could help the pair break above this key technical level.

Limited AUD upside, bearish cross stance

"The market currently prices around an 80% chance of a November RBA rate hike."

"Unlike central bank rate hike pricing elsewhere in the world, the market is hesitant to price in more RBA rate hikes in the coming months, in line with our call."

"With the market already pricing in another RBA rate hike in the near term, we would not expect the central bank decision to lend much further support for the AUD."

"AUD/USD has been trading below the 200d SMA for the past month due to softening global equity sentiment."

"A break above the key level is more likely if the USD could see a broad-based relief selloff after the US midterm election."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)