The Reserve Bank of Australia (RBA) left monetary policy unchanged in its meeting this morning but hawkishly opened the door for an upcoming rate hike. AUD/USD has strengthened after the release and is trading above the 0.76 level. Subsequently, economists at Rabobank have raised their AUD/USD year-end forecast to 0.78.

Opening the door to rate hikes in the coming months

“The RBA has been making small steps towards becoming less dovish in the past couple of months and the tone of this morning’s policy statement has added to the market’s perception that the RBA could be hiking rates in the not too distant future.”

“AUD/USD has jumped higher overnight on the back of the RBA meeting and subsequently breached our 0.76 medium-term target for the currency pair. Consequently, we are pushing up our forecast to 0.78 by year-end.”