Australia's Big Four banks now all expect the Reserve Bank of Australia to raise its cash rate to 4.60% in September, pushing AUD/NZD to its highest level since April 2013. The pair is testing resistance near 1.25-1.26, but the bigger question — whether the RBA needs to go further after September — will not be settled until September-quarter CPI lands on October 28.
Big Four Banks Now Agree on a September Hike
NAB, Westpac, CBA and ANZ all now expect the RBA to raise the cash rate 25 basis points to 4.60%, the highest level since 2011. NAB had already positioned for the move, and Westpac switched after Governor Michele Bullock's September 18 parliamentary testimony, with CBA and ANZ following on September 21.
According to ActionForex, Governor Bullock told the House Standing Committee on Economics that some upside inflation risks the RBA had flagged were now "materialising", pointing to renewed oil price increases, an unresolved Middle East conflict, and the AI investment boom. July inflation had already left little comfort. Headline CPI stood at 3.5% year-on-year and trimmed mean inflation at 3.6%. CBA estimates the probability of a September hike has risen from roughly 30% before July CPI to around 90% now.
The Real Argument Has Moved to How High Rates Go
Agreement on September masks a split over what comes next. Westpac and ANZ expect next week's decision to be split among board members, while CBA anticipates a unanimous hike. ANZ expects another hike in November that would lift the cash rate to 4.85%, arguing the latest inflation shock may mean the RBA ultimately needs a higher policy rate than previously assumed. CBA and Westpac stop short of that call. CBA identifies a 1.0% or stronger September-quarter trimmed mean CPI increase as the result that could put November firmly into play, while Westpac wants more evidence first.
Thursday's jobs report is unlikely to decide the September call itself. Economists expect unemployment to hold at 4.5% with employment rising about 20.9k, and CBA believes only a large downside surprise would change its view. Its relevance lies further ahead: Australia's labor market has been loosening gradually, with unemployment rising from 4.3% in March to 4.5% in July. Therefore, the real gate is September-quarter CPI on October 28, five days before the November 2-3 RBA meeting.
AUD/NZD Tests Stretched Resistance Near 1.25
Markets are already pricing the shift. AUD/NZD has climbed to its highest level since April 2013 and now trades around 1.245, within reach of the psychologically important 1.25 level. However, daily RSI has risen above 80 as the pair approaches a resistance zone containing a projection at 1.2534 and another at 1.2608.
There is no clear topping signal yet, and overbought momentum can persist in a strong trend. A retreat from the zone would stay corrective as long as 1.2274 support holds, while a decisive move through 1.2608 would suggest traders are pricing the RBA story beyond September and toward 4.85%.
Source: ActionForex
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