AUD/USD Caught Between Hawkish Fedspeak and Rising RBA Hike Bets
AUD/USD is caught between competing policy risks ahead of Australian GDP and US nonfarm payrolls. Fed Chair Kevin Warsh's hawkish Jackson Hole speech revived US rate-hike bets, while stronger Australian inflation and household spending have raised expectations of another RBA hike.
The AUD/USD price snapped an eight-week winning streak after the Fed's hawkish comments, but would likely have closed lower without renewed bets of an RBA hike. If the RBA hikes once and the Fed twice, the RBA-Fed cash rate spread would narrow to just 10bp.
Australia's Q2 GDP report on Wednesday is expected to add to the case for another RBA hike, with strong growth indicating demand remains too resilient. NAB and Deutsche Bank expect a September hike, while ANZ and CBA favour November.