FX.co ★ AUD/USD

The Aussie crosses continue to climb after the Australian dollar outperformed expectations for a Reserve Bank of Australia (RBA) interest rate hike. According to analysts at Commerzbank, the currency has been "gaining extra impetus due to interest rate expectations rising significantly," driving AUD/USD to its highest point since mid-September thanks to statements from the Deputy Governor of the RBA, Andrew Hauser. Hauser noted that the inflation outlook is "materially worse" than the RBA previously predicted, and that inflation expectations could be "de-anchoring of inflation expectations." Hauser pointed to Commerzbank survey results indicating that "an increasing number of firms think that 3-3.5% inflation is 'the new normal'." Given that the RBA's medium-term inflation objective is 2-3%, Commerzbank says this is "it certainly is concerning," especially since "trimmed-mean inflation came in at 3.6% in the latest data, well above the target range." In this light, Commerzbank believes that "the upcoming inflation release on October 28 becomes even more relevant." As per the RBA forecasts issued in August, "headline inflation was expected to drop to 3.6% and trimmed-mean inflation to 3.3% in December," while the forthcoming data "would at least give hints whether inflation has been moving in that direction." At the same time, if "price pressures remain high or even intensify, it would confirm the recent increase in interest rate hike expectations and raise the possibility of an interest rate increase at the RBA's meeting on November 3." The Australian Dollar closed Friday's session up more than 0.22% and gained more than 1.20% for the week. The currency pair is back above the 0.7000 level and poised to test multiple resistance levels between 0.7000 and 0.7100. The price currently stands at 0.7035. AUD/USD bias has turned bullish after it appreciated from 0.6900 levels in mid-October. The positive technical backdrop, along with expectations of another RBA interest rate hike in 2022, supported the Aussie. Technically, buyers must overcome major resistance at the 100-, 50-, and 200-day Simple Moving Averages (SMAs) at 0.7033, 0.751, and 0.7074, respectively. Breaking above that area could set the stage for a move toward 0.7100. Above that lies the key psychological level of 0.7150, followed by the September 9 daily high at 0.7237. Any move above that level may bring into focus the YTD high at 0.7277. Conversely, the first line of support for AUD/USD lies at 0.7000. Breaking past that level will put into focus the October 15 cycle low at 0.6894.