RBA Hawkishness Supports Aussie as US Inflation Data Looms

The Australian dollar held steady on Wednesday as investors waited for key inflation data from the US. The Reserve Bank of Australia's (RBA) hawkish rate outlook provided support to the Aussie, which is currently priced with a 50% chance of further RBA tightening in November.

RBA Governor Michele Bullock struck a more aggressive tone on Tuesday, stating that another rate hike might be necessary if inflation doesn't slow down as expected. The bank is looking for core inflation to undershoot last year's 1.0% gain in the third quarter.

A higher-than-expected US consumer price index reading could strengthen the case for a Federal Reserve rate hike, boosting the US dollar. However, markets currently have no cuts implied for next year, with analysts suggesting that the RBA's hawkish stance was intended to prevent the market from pricing in premature easing.

The Aussie has been trading near $0.7062, with resistance at $0.7078/88 and support at $0.7022 and $0.6923. Meanwhile, the New Zealand dollar was steady at $0.5881, having traded within a narrow range of $0.5861 to $0.6907 for over a week.