RBA Rate Hike Expectations Send AUD/USD Soaring

The Reserve Bank of Australia (RBA) is expected to deliver a 25bp rate hike tomorrow, according to ING's Francesco Pesole. This would take the cash rate to 4.60%, with Governor Michele Bullock likely leaving the door open for further tightening.

Persistent inflation concerns, tight labour markets, and resilient growth underpin this view. Even if crude prices decline, domestic fuel prices are set to remain sticky for longer, keeping inflation elevated.

The RBA's decision will have a significant impact on the Australian Dollar (AUD), with expectations already priced in. However, the AUD's reaction will be heavily dependent on whether Governor Bullock leaves the door open for more hikes.