Australian dollar hits 9-month high as RBA stays hawkish
By Wayne Cole
SYDNEY, Sept 24 (Reuters) -The Australian dollar hovered around nine-month peaks on Tuesday after the country's central bank held interest rates steady as expected and stuck to its hawkish script on policy needing to remain tight for now.
Sentiment was also aided by more stimulus from China's central bank, which cut reserve requirements and lending rates, including for existing home loans.
The Aussie stood at $0.6864 AUD=D3, after reaching its highest for the year so far at $0.6865. That took it close to major chart resistance formed by three separate peaks from 2023 at $0.6871, $0.6894 and $0.6899.
It also extended a winning streak on the yen to six straight sessions, rising as far as 98.69 AUDJPY=.
The kiwi dollar $0.6269 NZD=D3, just off a three-week top of $0.6280. Resistance lies at the August peak of $0.6298, with support at $0.6220 and $0.6180.
The Reserve Bank of Australia (RBA) kept its cash rate at 4.35% for a seventh consecutive meeting and repeated policy would need to stay restrictive to ensure inflation slowed.
Monthly consumer price data for August are due on Wednesday and forecast to show a sharp drop to 2.7%, from 3.5%, but largely due to temporary government rebates on electricity bills.
Core inflation is seen dipping to 3.4%, the lowest since early 2022 but still above the RBA's 2-3% target range.
Recent jobs figures have also surprised on the strong side, implying less urgency to ease policy than in Europe or the United States.
As a result, markets imply only a 24% chance the RBA will cut rates at its next meeting in November and a 64% probability of a move in December. Rates are seen at 3.34% by the end of 2025, compared with 2.83% in the U.S. and 1.73% in the EU.0#RBAWATCH
"We continue to think that the RBA will be the last developed market, with the exception of Japan, to cut policy rates in this cycle," said Harvey Bradley, portfolio manager at asset manager Insight Investment.
"In part, this is because the RBA were more cautious than other central banks in the hiking cycle and did not take policy rates to as restrictive levels as peers," he added. "Our base case remains a first cut in 6 months, followed by a further 50-75bps in 2025."
The Reserve Bank of New Zealand (RBNZ) has already cut its cash rate to 5.25% and is considered certain to go again in October and November, perhaps by 50 basis points at some point.
Markets imply rates will be down at 2.91% by the end of next year. 0#RBNZWATCH
Reporting by Wayne Cole; Editing by Sam Holmes
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