Rate Hikes Support Oceania Currencies Amid Precious Metals Rally
The Australian dollar and New Zealand dollar are expected to remain firm due to rate-hike expectations. In Australia, the Reserve Bank of Australia (RBA) is likely to increase interest rates further in response to persistent inflationary pressure. The July Consumer Price Index (CPI) came in at 3.5% year-on-year, exceeding market expectations.
The RBA's Assistant Governor Jones will speak on September 3, and his remarks may reinforce or rein in hawkish speculation. If the April-June quarter Gross Domestic Product (GDP) beats market forecasts, it would support the Australian dollar. Conversely, weak numbers could cap upside momentum.
In New Zealand, the Reserve Bank of New Zealand (RBNZ) is expected to raise its policy rate by 25 basis points to 2.75%. Markets have priced in an additional hike with over 90% probability, making the statement's content key. The RBNZ has signaled further tightening, and a strong statement would support the NZ dollar.
The South African rand is expected to find a firm footing due to rising precious metals prices. Medium- to long-term fiscal concerns in the United States and Japan have driven a global shift toward safe-haven assets. The rand's strength is likely to be sustained by its resource-linked nature.