AUD/USD Enters Q4 Amid Balanced Interest Rate Backdrop

The Australian dollar is entering the fourth quarter (Q4) of the year with monetary policy firmly back in control, after the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) both resumed tightening.

Markets expect at least one more RBA hike to 4.60%, which would take the cash rate to its highest level since 2011. However, rising unemployment could give policymakers room to pause after one more hike, especially if inflation remains elevated at 3.6% year-on-year.

The Fed has already delivered a rate hike in September, and its updated projections point to a median year-end policy rate of 4.1%. Market pricing suggests there's a high chance of another hike in October, which could further support the US dollar and weigh on AUD/USD.