Australian Dollar Rises Amid RBA Rate Hike Speculation

(RTTNews) - The Australian dollar strengthened against other major currencies in the European session on Wednesday, as the Reserve Bank of Australia (RBA) did not hesitate to raise interest rates further this year, according to minutes from the September meeting.

The minutes "reinforced the message from the policy meeting that the RBA is prepared to hike rates further if required even though they have already lifted the policy rate by 100bps this year."

Traders await Australia employment statistics due to be released on Thursday. According to the figures, the economy added 20K new employment in September compared to 39.5K in August. At 4.6%, the unemployment rate is expected to stay constant.

European stocks traded higher as investors await the release of a closely watched report on U.S. consumer price inflation for directional cues. The annual rate of consumer price growth is expected to have accelerated to 3.7 percent in September from 3.4 percent in August.

The data along with the release of Thursday's producer price index figures and Fed Chair Kevin Warsh's last speech before the upcoming rate meeting could affect future Federal Reserve decisions.

New York Fed President John Williams said on Tuesday he believes it might be appropriate to raise interest rates one more time this year, but there is no need for further tightening in 2027.

Fed Governor Christopher Waller noted that the surge in U.S. Treasury yields to 24-year highs is driven by stronger economic growth and AI investment, adding that inflation expectations remain well anchored.

CME Group's FedWatch Tool currently indicates a 23 percent chance of a Fed rate hike later this month and an 88 percent probability of an increase in December.

In economic news, data from the National Bureau of Statistics showed that China's consumer price inflation rose slightly in September driven by higher fuel prices and producer price inflation hit the highest level in more than four years.

Consumer prices rose 0.9 percent in September from a year ago, slightly faster than the 0.8 percent increase seen in August. However, this was weaker than the forecast of 1.0 percent.

At the same time, core inflation that excludes volatile food and energy prices remained stable at 1.0 percent.

On a monthly basis, consumer prices rose 0.2 percent compared to forecast of 0.3 percent.

Producer price inflation accelerated to 5.0 percent from 3.8 percent in August, the NBS said in a separate report. The rate hit the highest since June 2022. Economists had expected the rate to rise moderately to 4.4 percent.

Data from the General Administration of Customs showed that China exports growth accelerated more-than-expected in September on strong demand for hi-tech products, suggesting that overseas demand will help counteract the economic slowdown brought on by domestic demand and investment.

Exports logged a sharp annual growth of 36.3 percent in September, bigger than the 25.0 percent rise in August. Shipments were expected to grow 25.5 percent. Import growth accelerated to 31.0 percent in September from 28.2 percent in August and exceeded the forecast of 24.5 percent.

As a result, the trade surplus reached $133.5 billion in September, which was above the forecast $116.8 billion.

In the European trading today, the Australian dollar rose to nearly a 2-year high of 1.5981 against the euro, more than a 2-week high of 0.7010 against the U.S. dollar and nearly a 3-week high of 111.00 against the yen, from early lows of 1.6040, 0.6982 and 110.56, respectively. If the aussie extends its uptrend, it is likely to find resistance around 1.58 against the euro, 0.71 against the greenback and 112.00 against the yen.

Against the Canada and the New Zealand dollars, the aussie advanced to 2-day highs of 0.9961 and 1.2470 from early lows of 0.9927 and 1.2428, respectively. The aussie may test resistance around 1.00 against the loonie and 1.25 against the kiwi.

Looking ahead, U.S. MBA mortgage approvals data, Canada building permits for August, U.S. CPI data for September and U.S. Fed Beige book report are slated for release in the New York session.