RBA, Fed Hikes Set Stage for AUD/USD Q4 Volatility

The Australian dollar's outlook for Q4 has shifted due to changes in monetary policy. The Reserve Bank of Australia (RBA) is expected to deliver at least one more hike, while the Federal Reserve has already resumed tightening.

Despite rising unemployment and slowing growth, persistent inflation remains a concern for the RBA, making another hike difficult to rule out. However, the labour market provides an important counterweight, with unemployment having already risen to 4.6% in August.

The Fed's projections point to one more hike in Q4, but markets are increasingly pricing the risk of two. This keeps the US dollar supported unless growth or inflation data weaken materially.