Markets now price a 71.2% probability of a September RBA hike, up from a minority economist view a week ago, with every cited forecaster expecting another increase and disagreeing only on whether it lands on September 29 or in November.
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RBA September hike odds hit 71% as AUD/NZD clears 1.2283
Traders now assign a 71.2% probability to a Reserve Bank of Australia increase at its September 29 meeting, a repricing that has carried AUD/NZD through the 1.2283 May high and left the cross at about 1.23.
"We have one big problem, and that's inflation," RBA Deputy Governor Andrew Hauser said in an ABC 7.30 interview on Tuesday, adding that inflation has run above target long enough that the Board will eventually have to decide "that is long enough." Hauser also explained the gradual pace of policy: "The reason as a board we have decided to take it slowly is to preserve as many jobs in this country as we could."
The pricing implies a 25 basis point move from 4.35% to 4.60%, producing a probability-weighted post-meeting rate near 4.53%. The curve does not stop there. By November 2, futures price roughly 1.18 cumulative hikes; by December 7, about 1.48; and the path extends toward 2.1 by August 2027. Australia's cash rate has risen 75 basis points this year, and the market is now allowing for a measured extension rather than a single final move.
That is the transmission chain running through this week's price action. Higher Australian front-end expectations widen the differential against New Zealand, where markets have been reluctant to extend the RBNZ's latest increase into an equally aggressive path, and the currency pair has moved in the same window as the rate repricing.
Economists Agree on the Destination, Not the Date
A September hike was a minority economist call a week ago. Goldman Sachs economist Andrew Boak now favors it after previously assigning September only a 45% probability and leaning toward November. "[The] hawkish commentary, together with our commodity team's upgraded oil price forecasts, now makes September the most likely timing in our view," Boak said. Macquarie economist Ric Deverell also prefers September, arguing that the 75 basis points of tightening delivered this year is slowing activity while the labor market still points to limited spare capacity.
Westpac Chief Economist Luci Ellis and RBC economist Robert Thompson reach the same destination on a later timetable, both preferring November for stronger inflation confirmation. Ellis has warned against "overreacting to a noisy monthly" inflation print, while Thompson places greater weight on quarterly data. None of the four forecasters cited expects the tightening cycle to be finished.
RBA Assistant Governor Sarah Hunter reinforced the inflation focus by pointing to services, rents and construction costs, as well as higher oil prices. Her reference to crude above $90 has been overtaken by Brent above $100, with Australian petrol prices approaching $2.10 a litre and diesel above $2.50. The last time Brent traded above $100, in the 2022 energy shock, Australian headline inflation peaked at 7.8% in the December quarter of that year, and the RBA responded with seven consecutive increases.
Oil is only half of the story. AI-related datacentre investment is adding demand to a construction sector already delivering housing and infrastructure with limited labor and material capacity — a domestic demand-against-supply problem rather than an imported cost shock. Weak productivity limits the economy's room to absorb that demand without generating price pressure, which is why hawkish RBA language can coexist with soft consumer sentiment surveys.
The Next Zone Is 1.2534 to 1.2608
The technical picture matches the policy shift. AUD/NZD spent months below 1.2283 before breaking through this week, with the daily MACD accelerating above zero and the daily RSI at approximately 73.78 — a strong breakout configuration that is also clearly overbought, making some consolidation consistent with the bullish structure. The weekly RSI sits near 64.25, well below the daily reading, and weekly MACD has turned higher above zero, which frames a short-term pause as a timeframe issue rather than evidence the trend has exhausted itself.
Key near-term support is 1.2211. A break below would risk a deeper retreat toward the rising 55-day EMA before the larger uptrend can resume. Above current levels, two projections cluster: 1.2534, the 38.2% projection of the 1.0649–1.2283 rise measured from 1.1910, and 1.2608, the 161.8% projection of the 1.0278–1.1489 advance measured from 1.0649. Under the current wave count, the rise from 1.0649 is the fifth wave of the advance from the 0.9992 low set in 2020, so the structure could become mature as the pair approaches those levels.
For Australian exporters and anyone hedging AUD exposure, the practical question is how much of the rate repricing is already in the price. A September hike that arrives as expected would leave the market focused on the November 2 and December 7 meetings, where the curve currently prices 1.18 and 1.48 cumulative hikes. A surprise hold on September 29, or guidance that plays down the inflation persistence Hauser described, would remove the differential support behind the breakout and put 1.2211 back in play.
This article is for informational purposes only and does not constitute investment advice.
