09.10.202502:58:19UTC+00Aussie Dollar Gains Amid Rising Inflation Outlook

The Australian dollar rose to approximately $0.660 on Thursday, extending gains from the previous session, as increased inflation expectations bolstered the Reserve Bank of Australia's (RBA) hawkish outlook. In October, consumer inflation expectations climbed to 4.8% from 4.7% in September, marking the highest level since June. This increase, fueled by the rollback of subsidies, rising labor costs, and pressures from global trade and commodities, suggests persistent price pressures. Consequently, this aligns with the central bank’s cautious approach, with expectations to maintain its policy rate, after holding the cash rate at 3.6% in September, due to ongoing inflation and a tight labor market. However, the currency's gains were tempered by a stronger US dollar, as investors remained vigilant regarding the implications of the ongoing government shutdown, which spurred demand for safe-haven assets. Market participants now await remarks from Federal Reserve Chair Jerome Powell later today, following the Federal Open Market Committee (FOMC) meeting, which indicated diverse opinions on future rate adjustments.