The Reserve bank of Australia had kept rates at 4.1% for the third straight meeting at the beginning of the month. It was able to do that as inflation has been moderating, the economy is sluggish and labor market shows signs of cooling.
On the other hand, policymakers kept more tightening in play and the accounts of the aforementioned decision revealed that a 0.25% hike was discussed . Inflation is still too high and CPI rose 5.2% y/y in August (from 4.9%) according to today's data. Furthermore, employment conditions remain tight, with nearly 65,000 jobs added in August and the participation rate hitting record highs at 67%.
These releases sustain prospects of more hikes by the RBA and AUD/USD reacted higher to today's hot CPI report, but the move was short-lived. USD strength persists after the Fed's hawkish hold, which kept more hikes on the table and pointed to a tighter 2024 path than previously expected, affirming the higher-for-longer approach.
Bears push for new 2023 lows, which will give them a shot at 0.6271, although fresh impetus would likely be needed for taking it out. On the other hand, the move starts to look stretched and AUD/USD may be able to find some reprieve. The upside is unfriendly though and the pair has failed repeatedly above 0.6500.
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 04 Dec 2023 https://www.rba.gov.au/monetary-policy/rba-board-minutes/2023/2023-09-05.html