Aussie Dollar Gains Strength Against European Currencies on RBA Hawkish Hold
The Reserve Bank of Australia (RBA) is expected to maintain its hawkish stance during its upcoming meeting, which could further strengthen the Australian dollar against European currencies. The RBA's decision comes as higher energy prices and geopolitical tensions in the Gulf drive up the Aussie's terms-of-trade tailwind.
According to FOREX.com, inflation has been understated by the RBA, while unemployment has been overestimated. This suggests that the path towards getting inflation back to acceptable levels may be more advanced than the Bank thought three months ago.
The market still favors one more hike this cycle, with 82% probability attached to it by February next year. The question is what this means for the RBA's updated forecasts for growth, unemployment, and inflation released today.