Monthly Wrap: AUD – Australian dollar whipsaws as RBA delivers rate hike

Philip McHugh November 9th 2023 - 2 minute read

Key takeaways:

  • Mixed economic releases undermine AUD
  • RBA rate hike fails to strengthen ‘Aussie’
  • AUD monthly lows: £0.51, $0.62, €0.59, NZ$1.06, CA$0.85
  • AUD monthly highs: £0.52, $0.65, €0.60, NZ$1.09, CA$0.89

The Australian dollar began the month on poor footing, as escalating violence between Israel and Hamas spooked markets, leading bearish trading conditions to weigh on the risk sensitive currency.

Furthermore, iron prices began to decline, which weighed on the commodity-sensitive ‘Aussie’.

Hawkish meeting minutes from the Reserve Bank of Australia (RBA) brought some cheer to AUD investors in mid-October. However, this was counterbalanced by downbeat employment data which pointed to a cooling labour market.

Towards the end of the month, the ‘Aussie’ gained ground as inflation printed above forecasts, leading to renewed rate rise bets.

At the start of November, the RBA hiked interest rates by 25bps, bringing the overall rate to 4.35%. However, this had an adverse effect on the ‘Aussie’, as it was largely considered to be the RBA’s final hike. Because of this, AUD exchange rates began to plummet.

Elsewhere, shifts in risk appetite ensured the ‘Aussie’ remained in flux over the recent month.

Looking ahead through November, a suite of impactful data releases could drive movement in the Australian dollar.

The latest RBA statement on monetary policy is due on Friday. Due to the perceptions that the bank’s tightening cycle is over, any pushback on this could lift AUD.

The latest Westpac consumer confidence data is forecast to show consumer optimism strengthen in November, which could boost AUD. However, AUD exchange rates could weaken if October’s business confidence index weakened as forecast.

The RBA are set to publish the minutes from their latest meeting in mid-November. These minutes may look to explain why the RBA interrupted their extended pause, which may strengthen AUD.

Later in the month, November’s private sector indexes are due to print. If the Australian service and manufacturing sectors show further signs of weakness, AUD exchange rates could drop.

Written by
Philip McHugh

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