The clearest policy-divergence currency trade on the board this morning has a name: AUD/USD. Goldman Sachs flipped its Reserve Bank of Australia call overnight, moving from a hold to a 25-basis-point hike at the RBA’s November 2-3 meeting. The Fed, by contrast, is widely expected to sit still at its October 27-28 meeting. That split, sharpening in real time, is already moving the pair.
What Hauser Said, and Why It Mattered
RBA Deputy Governor Andrew Hauser warned Wednesday that the inflation outlook looked “materially worse” in the coming months. Speaking at Citi’s Australia and New Zealand Investment Conference in Sydney, he said the bank’s economists were still finalising their quarterly forecasts but the inflation outlook did look “materially worse”, in part due to high oil prices.
Brent last traded around $110 a barrel, up from about $103 at the end of September. It was roughly a third higher than the RBA had assumed in its August forecasts. Beyond oil, Hauser also pointed to technology and AI-related costs as a channel for price pressures, and to a boom in data centre construction as a source of domestic cost pressure.
Hauser warned that some people do not expect inflation to come back to the RBA’s target, calling that “a central banker’s nightmare.” He also noted that some businesses are beginning to treat inflation of 3 to 3.5% as the new normal. That is the language that forces central banks to act: not because the data demands it today, but because expectations are slipping.
Goldman’s Call and the Odds Shift
Goldman Sachs economists, including Andrew Boak, characterized Hauser’s remarks as “clearly hawkish” and now expect the RBA to increase its policy rate by 25 basis points to 4.85% at the November meeting. The RBA meets November 2-3. Markets have been pricing a meaningful chance of a November hike, though the implied probability can move quickly day to day.
Goldman Sachs, UBS, and ANZ have all flagged the risk of an RBA hike in November. That is not one house going rogue, that is a consensus forming in a single session.
A November hike would be the RBA’s fifth increase this year. The cash rate currently sits at 4.60%. Consumer price data due next week will be a key input for the November decision. The CPI release is scheduled for October 28, 2026, and markets will be watching the trimmed mean closely given the RBA’s focus on underlying inflation and the 2% to 3% target band.
The Divergence That Drives the Trade
While the RBA is moving toward a fifth hike, the Fed is essentially frozen. The Federal Reserve announces its next rate decision at the conclusion of its October 27-28 meeting. CME FedWatch probabilities change continuously with pricing, but the market has recently leaned toward a pause. The median Fed official’s projection still leaves room for the next move later in the year. That is months behind Australia’s pace and a different policy posture entirely.
The AUD is already responding. AUD/USD traded above 0.7000 on October 21 and reached an intraday high near 0.7031. The pair confirmed a breakout through a short-term trading range and now eyes a move through nearby technical resistance levels.
The key upcoming event is Q3 inflation data on October 28, just days before the November meeting. A stronger-than-expected trimmed mean reading could tip the balance firmly toward another hike. That release lands while the Fed is in its own meeting window, so the week concentrates the policy-divergence catalyst.
The Risk Side
There is a cost to the RBA tightening further that traders should not ignore. Rising interest rates are intensifying pressure on Australia’s roughly A$200 billion private credit market, particularly among lenders exposed to the country’s struggling property sector. In recent months, Australia’s corporate regulator has urged the sector to ensure valuations properly reflect tighter global financial conditions. The collapse of Sydney developer Bathla Group in August, with debt widely reported around A$3.4 to A$3.5 billion, has already sharpened investor focus on liquidity and concentration risks.
The trade is live. The week of October 27-28, when Australia prints Q3 CPI and the Fed meets, is the session that either confirms or breaks this thesis. Until then, the rate differential is tilting toward AUD, and the positioning case for long AUD/USD is the strongest it has been in weeks.
