The Australian and New Zealand dollars remained steady on Tuesday, benefiting from gains against European currencies amid political unrest in France. The Australian dollar (AUD) held at $0.6977, recovering from a recent 15-week low of $0.68945, with key resistance levels at $0.6993 and $0.7015. The New Zealand dollar (NZD) stood at $0.5665, up slightly from overnight trading, with major support at a 17-month low of $0.5566 and resistance at $0.5675 and $0.5750.
The AUD gained ground against the euro, sterling, and Swiss franc as political concerns weighed on bonds across Europe. Investors are now focusing on domestic interest rate developments, particularly the Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser's appearance on Wednesday, where he is expected to address the possibility of a fifth rate hike this year.
RBA's head of financial markets noted that the labor market might be loosening faster than anticipated but emphasized the importance of the third-quarter consumer price data due on October 28. Analysts predict core inflation could rise by 1.0% in the quarter, maintaining the annual pace at 3.6%, above the RBA's target range of 2% to 3%. Westpac analysts anticipate a 0.9% rise in core inflation, pushing annual inflation to 3.5%, higher than the RBA's forecast of 3.3%.
Markets currently assign a one-in-three chance of a rate hike in November, increasing to 56% for December. Meanwhile, the Reserve Bank of New Zealand (RBNZ) is set to announce its rate decision on October 28, with an 89% probability of a quarter-point move to 3.0%. Markets also suggest rates could reach 3.75% or more next year, surpassing the RBNZ's own projection of 3.20%.