Aussie Dollar Surges on Hawkish RBA Expectations
The Australian Dollar gained ground against the US Dollar on Friday, rising by 0.3% to trade at 0.7129. The move was largely driven by a shift in expectations for interest rate hikes from the Reserve Bank of Australia (RBA), following Governor Michele Bullock's testimony before a parliamentary committee.
Bullock stated that inflation risks are becoming more pressing, citing rising Middle East oil prices, global AI investment boom, and extreme weather as key pressures. This sparked a surge in market-implied odds of an RBA rate hike to 93% by September 29, with the expected terminal rate reaching 4.85% by early 2027.
UBS also weighed in, signaling two additional RBA rate increases to reach a 4.85% terminal rate. This reinforced hawkish repricing across rates markets and provided further support for the Aussie Dollar.