Market conditions for the Australian dollar are currently positive, with the currency edging higher due to increased expectations of a potential rate hike by the Reserve Bank of Australia (RBA). This sentiment is fueled by recent mortgage rate increases by major Australian banks, signaling a higher-for-longer interest rate environment. The Australian dollar is also benefiting from a rise in global stocks, including Australian shares.
- The Australian dollar is trading around $0.67 and is on track for weekly gains.
- Commonwealth Bank of Australia and Macquarie Bank have increased mortgage rates.
- Markets are pricing in a 27% chance of a rate hike at the RBA’s February meeting, rising to 76% by May.
- Australian shares have rallied for a fifth consecutive session, reaching a more than two-month high.
- Australia’s Consumer Inflation Expectations eased slightly in January to 4.6%, but remain above the RBA’s target.
- The market is starting to price in a rate hike by the RBA, which is expected to support the Aussie Dollar.
The information suggests a strengthening outlook for the Australian dollar. The potential for increased interest rates compared to the US, coupled with positive performance in the Australian stock market, could lead to further appreciation of the currency. Inflation data, while still above target, is being closely watched for indications of future monetary policy decisions. Overall, the factors point toward continued support for the currency in the near term, particularly leading up to the RBA’s next meeting.