AUD/USD Outlook Hinges on RBA Rate Decision and US Dollar Strength

The Australian dollar's Q4 outlook is influenced by both the Reserve Bank of Australia (RBA) and the Federal Reserve. The RBA has already delivered several rate hikes, with at least one more expected before year-end to combat persistent inflation.

Australia's economy continues to slow down, with GDP growing just 0.4% in Q2 and 2.1% over the year. However, unemployment remains a concern, rising to 4.6% in August. Inflation is still a pressing issue, with trimmed mean inflation at 3.6% year-on-year.

The RBA's monetary policy has become more hawkish, with expectations of a further rate hike to 4.60%. However, Governor Michele Bullock warned that some inflation risks are materializing, and rising unemployment may allow the RBA to pause after one more hike in Q4.