Forex News: Australian Dollar Rises Amid RBA Rate Hike Speculation

Australian Dollar Rises Amid RBA Rate Hike Speculation

(RTTNews) - The Australian dollar strengthened against other major currencies in the Asian session on Wednesday, as inflation has decreased more than anticipated, it is still high. Economists predict that interest rate increases will likely be postponed but are still a possibility.

Data from the Australian Bureau of Statistics showed that Australia inflation slowed more than expected to a three-month low in November, but core inflation remained stable.

The consumer price index rose 3.4 percent year-on-year in November, slower than the 3.8 percent increase in October. This was the slowest since August. Inflation was seen at 3.6 percent.

Economists at Commonwealth Bank and NAB predicted that the Reserve Bank will raise interest rates in February after inflation shot up to 3.8% in the year ending in October.

However, trimmed mean inflation slowed to 3.2 percent from 3.3 percent in the previous month.

On a monthly basis, the CPI remained flat for the second straight month after rising 0.5 percent in September.

Last month, the Reserve Bank of Australia left its key interest rate unchanged for the third straight at 3.60 percent, which was the lowest since March 2023.

The central bank observed signs of a more broad-based increase in inflation and markets had expected the RBA to hike rates at its first meeting of the year in February.

In other economic news, data from the Australian Bureau of Statistics showed that the total number of building permits issued in Australia in was up a seasonally adjusted 15.2 percent on month in November, coming in at 18,406. That beat expectations for an increase of 2.0 percent following the 6.1 percent contraction in October.

On a yearly basis, building permits jumped 20.2 percent after slipping 2.2 percent in the previous month.

Approvals for private sector houses rose 1.3 percent on month and 3.2 percent on year to 9.458, while approvals for private sector dwellings excluding houses surged 34.1 percent on month and 55.3 percent on year.

In the Asian trading today, he Australian dollar rose to a 13-year high of 1.1693 against the NZ dollar, nearly a 1-1/2-year high of 105.94 against the yen and nearly a 8-month high of 1.7292 against the euro, from yesterday's closing quotes of 1.1647, 105.55 and 1.7350, respectively. If the aussie extends its uptrend, it is likely to find resistance around 1.17 against the kiwi, 107.00 against the yen and 1.69 against the euro.

Against the U.S. and the Canadian dollars, the aussie advanced to more than 1-year highs of 0.6767 and 0.9346 from Tuesday's closing quotes of 0.6737 and 0.9307, respectively. The aussie may test resistance around 0.68 against the greenback and 0.94 against the loonie.

Looking ahead, U.S. MBA mortgage approvals data, U.S. and Canada PMI reports for December, U.S. factory orders for October and U.S. EIA crude oil data are slated for release in the New York session.

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