AUD AI Market Pulse, Thursday, 29 October 2026
JAFX AI’s read of the news on AUD (Australian dollar), as it stood at the end of the day: read at 21:00 UTC.
Bias: bullish
AUD firm near one-month highs (~0.7040-0.7055) on hot CPI and RBA hike bets, but capped below 0.7070. A Nov 3 hike is ~80%+ priced, so it needs hawkish guidance to extend.
AUD/USD held its post-Fed gains after jumping ~0.5% to 0.7054 when Warsh left rates at 3.75-4.00% without a clear December steer. It printed a fresh monthly high at 0.7068 before easing to ~0.7040 as the USD firmed ahead of US Q3 GDP and September PCE. UOB sees overbought conditions and doubts a sustained break of 0.7070. The US data outcome is not in the inputs.
The past week
Hot Australian inflation drove the week. September CPI came in at 4.3% y/y (f/c 4.2%), Q3 trimmed mean rose to 3.7% y/y, and Q3 trimmed mean ran at 1.0% q/q SA against the RBA's 0.8% projection. That pushed RBA hike odds from ~78% to ~82%, and Standard Chartered now expects 4.85% on Nov 3. AUD outperformed broadly: AUD/NZD hit its highest since March 2013 near 1.2600 after the RBNZ's surprise hold, and AUD/JPY extended to ~111.30.
The bigger picture
This is a global re-tightening regime: the RBA is leaning to hike, the BoC just hiked to 2.50%, and the Fed is on hold with hike risk. AUD is supported by relative policy divergence against dovish peers like the RBNZ. Against the USD, a hawkish Fed and safe-haven flows limit upside, and AUD/USD has struggled at its 200-day MA.
Positioning
A November RBA hike to 4.85% is largely priced (78-82% odds), and BBH notes futures also price another move in Q1. That makes the reaction asymmetric: a hold would be a sharp AUD-negative shock, while a hike alone mostly confirms consensus. Fed December hike odds near 85% are also keeping the USD supported, which limits AUD/USD more than AUD crosses.
Scenarios it set out
- RBA hikes to 4.85% (f/c) with hawkish guidance leaving the door open to further tightening AUD bid beyond consensus; AUD/USD retests the 0.7070 cap, with 0.7095 the next upside reference if it clears. AUD crosses likely extend.
- RBA hikes to 4.85% but signals one-and-done or data-dependent caution 'Sell-the-fact' risk since the hike is ~80% priced and a Q1 move is partly priced; AUD/USD likely slips back toward 0.7040/0.7020 support.
- RBA holds at the current rate (vs 4.85% f/c) Sharp AUD downside repricing; AUD/USD likely breaks 0.7020 and threatens 0.6995, which UOB flags as negating the upside view. AUD/NZD unwinds from near 1.2600 toward 1.2490.
What it said to watch
- AUD/USD 0.7070 resistance (UOB cap) vs 0.7020/0.6995 support
- RBA November hike odds, currently ~82% for 4.85%
- US Q3 GDP/PCE outcome and Fed December hike odds (~85%) driving the USD leg
- AUD/NZD overbought near 1.2600, with support at 1.2490
- AU PPI tonight as a final inflation input before the RBA
Risk ahead, as it saw it
AU PPI (YoY) on Oct 30 at 00:30 UTC (no forecast). TD-MI Inflation Gauge and Building Permits (f/c 2.1%) on Nov 2. The main risk is the RBA decision, statement and SoMP on Nov 3 at 03:30 UTC (f/c 4.85% hike), followed by the press conference at 04:30 UTC. S&P Global PMIs follow on Nov 3 at 22:00 UTC (Composite f/c 47.7, Services f/c 47.8).