Australian, NZ dollars hold steady; hawkish RBA lends support

According to Business Recorder, the Australian and New Zealand dollars moved little on Wednesday while traders waited for a key American inflation print. An upside surprise in core US consumer prices might add weight to arguments for another Federal Reserve increase and lift the greenback, whereas a cooler figure would likely produce the reverse. Pricing in markets points to roughly even odds of a Fed move in September and a similar likelihood of further Reserve Bank of Australia tightening in November.

The RBA kept rates unchanged at 4.35% on Tuesday, but Governor Michele Bullock signalled a considerably tougher stance during her press briefing. She said a further hike could well be needed if inflation fails to ease as expected. Attention now turns to third-quarter consumer price data due in late October, with the central bank hoping core inflation will come in below last year's sizeable 1.0% rise.

Belinda Allen of CBA said the RBA's implied forecasts show run rates of 0.84%, 0.81%, 0.72% and 0.64% from the third quarter, which she called key reference points. She warned a November hike remains possible if inflation exceeds expectations or growth fails to slow, and her forecast includes two rate cuts in 2027. The Aussie was last at $0.7062 and the kiwi at $0.5881, both little changed.