EL7.AI
ForexMedium•21 October 2026•
2 min read

Australian dollar rises 0.41% as bets on November rate hike increase

Key Facts

1The Australian dollar rose 0.41% to 0.7031 U.S. dollars, according to a Reuters report.
2Markets price in a roughly 50% chance of a rate hike to 4.85% in November, up from 30% at the start of the week.
3Annual inflation accelerated to 4.0% in August from 3.5% in July.
4Total seasonally adjusted employment fell by 39,300 jobs in September.
5The seasonally adjusted unemployment rate rose 0.1 percentage point to 4.7% in September.

The Australian dollar rose 0.41% against the U.S. dollar to 0.7031, according to a Reuters report dated October 21, 2026, as markets increased bets on an Australian interest rate hike in November. The agency said markets were pricing in a roughly 50% chance of rates rising to 4.85% next month. Those odds stood at 30% at the start of the week. This follows the Reserve Bank of Australia's decision on September 29, 2026, to raise rates by 25 basis points to 4.60%. According to the Western Australian Treasury Corporation, the decision took rates to their highest level since October 2011. The corporation added that the decision was unanimous and widely expected by markets.

Speaking on October 21, Hauser said the inflation outlook had become "materially worse" than the bank's estimates in its August report. He warned of a shift in businesses' inflation expectations, saying: "We cannot allow expectations to drift away from the target." He said rising technology prices linked to the artificial intelligence boom were feeding through to the consumer price index. Australian Bureau of Statistics data had shown annual inflation accelerating to 4.0% in August from 3.5% in July. Annual trimmed mean inflation stood at 3.6% in August.

Meanwhile, Australian Bureau of Statistics data showed total seasonally adjusted employment fell by 39,300 jobs in September. Part-time employment declined by 73,700 jobs during the month. The seasonally adjusted unemployment rate rose 0.1 percentage point to 4.7%, according to the bureau. The S&P Global Australia Composite Purchasing Managers' Index registered 51.3 in September, indicating modest growth in private-sector activity. Michele Bullock had said at the September decision press conference that domestic spending and investment had been stronger than expected, despite weak sentiment and deteriorating housing market conditions.

The bank had forecast in its August report that trimmed mean inflation would remain above 3% until mid-2027. Those forecasts included a decline to 2.5% by early 2028. Hauser left the next meeting's decision open, explaining that the bank was still finalising its economic forecasts, and said of the decision: "I don't know for certain." The Australian Bureau of Statistics releases the September consumer price index on October 28, 2026. The next interest rate decision will be announced on November 3, 2026, at 2:30 p.m. local time.