The Australian dollar received a boost fromhotter-than-expected Q3 CPI data on Wednesday.
The strong inflation pulse will likely tip the Reserve Bank of Australia into hiking rates by 25 basis pointsat the next meeting on Nov 7.

RBA Governor Michele Bullock spoke on Tuesday night, warning of the risk inflation would prove stubborn and saying the central bank would not hesitate to raise rates if that was the case.
The RBA board would be uncomfortable with the trimmed mean CPI rising 1.2% versus the 1.1% forecast and 0.9% in Q2.

The market 0#RBAWATCHis now pricing in a 65% chance of a 25 bps hike to 4.35% in November from a 35% chance just before the CPI release.

The hawkish turn in RBA expectations comes as the market is pricing out any more tightening from the U.S. Federal Reserve.
This could underpin the AUD/USD unless external factors such as China economic uncertainty or geopolitical concerns dominate investor flows.

The AUD/USD is trading just below the 55-day moving average at 0.6406.
A clear break of that level targets the 38.2 Fibonacci retracement of the July-October fall at 0.6519.

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