AUD/USD Braces for Balancing Act in Q4 Amid RBA and Fed Hikes
The AUD/USD is facing a more balanced rate backdrop in Q4 as both the RBA and Fed hike rates, but with different expectations. The Australian dollar has retreated from its Q3 highs despite rising rate expectations due to US dollar strength and broader risk sentiment.
With persistent inflation and an expected one more RBA hike to 4.60%, policymakers may pause tightening in Q4 as unemployment rises. However, the Fed's own projections point to another hike before the end of the year, with market pricing increasingly anticipating two further hikes. This keeps the US dollar supported unless growth or inflation data weaken.
The AUD/USD technical outlook shows a cautious tone, with charts suggesting a topping-out scenario and potential breaks below 0.67c if the selloff continues. Seasonality patterns in Q4 show diminishing volatility through to December, but November's average loss outweighs its gain.