Forex News: Australian Dollar Rises Amid RBA Rate Hike Expectations

Australian Dollar Rises Amid RBA Rate Hike Expectations

(RTTNews) - The Australian dollar strengthened against other major currencies in the Asian session on Friday, as recent Australia's economic data raised the prospect of an interest rate hike by the Reserve Bank of Australia or the RBA as soon as this month.

The Australian Bureau of Statistics or the ABS reported on Wednesday that Australia's economy expanded 0.4 percent QoQ in the second quarter (Q2), marginally above projections.

Traders have increased the likelihood of a September rate hike by the Reserve Bank of Australia (RBA) to roughly 70 percent, up from 50 percent before to the data.

Asian stock markets traded higher as traders scaled back bets on an imminent interest rate hike by the U.S. Fed this month following dovish comments from Fed Governor Christopher Waller, who said he would favor keeping interest rates unchanged if inflation continues to ease. They also assessed renewed tensions in the Middle East after the recent flare-up.

CME Group's FedWatch Tool currently suggests there is still a 50.4 percent chance the Fed will raise rates by a quarter point, but that is down from 63.2 percent on Wednesday.

Traders were also looking ahead to the closely watched US monthly employment report for August due later in the day, which could have a significant impact on the outlook for interest rates.

The latest flare-up in the Middle East came after a US attack on Iran triggered retaliatory strikes on American bases across the region.

Although US President Donald Trump indicated that renewed strikes on Tehran would not last too long, tensions remain high around the Strait of Hormuz.

Crude oil prices ticked higher on hopes that the new wave of U.S. strikes on Iran will be limited. West Texas Intermediate crude for October delivery was up $0.24 or 0.26 percent at $91.26 per barrel.

In the Asian trading today, the Australian dollar rose to a 2-day high of 0.9948 against the Canadian dollar, from yesterday's closing value of 0.9948. The aussie may test resistance around the 1.00 region.

Against the U.S. dollar and the euro, the aussie advanced to near 4-month highs of 0.7215 and 1.6117 from Thursday's closing quotes of 0.7200 and 1.6149, respectively. If the aussie extends its uptrend, it is likely to find resistance around 0.73 against the greenback and 1.60 against the euro.

The aussie edged up to 112.80 against the yen, from yesterday's closing value of 112.80. On the upside, 115.00 is seen as the next resistance level for the aussie.

Looking ahead, Eurozone retail sales for July is due to be released in the European session at 5:00 am ET.

In the New York session, U.S. and Canada jobs data for August, Canada Ivey PMI for August and U.S. Baker Hughes oil rig count data are slated for release.

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