Dollar Firm Amid Aggressive Fed Pricing as RBA Hikes Again

The US dollar remains firm due to aggressive pricing of Fed policy, pushing technical momentum indicators into overbought territory.

There is some precedent for a rate hike six days before a national election, with such moves seen in 2008, 2018, and 2022. Market participants are pricing in almost 100 basis points of hikes over the next 12 months.

The RBA raised interest rates by 25 basis points to 4.60 percent today, citing elevated inflation and upside risks materialising from global energy price increases and AI-related demand driving rapid growth in technology prices.