Australian Dollar, AUD/USD, RBA, CPI, Inflation, ASX 200 – Talking Points

  • The RBA continues their inflation combat, once more mountain climbing by 0.5% to 1.85%
  • AUD/USD went decrease within the aftermath primarily based on the language within the assertion
  • The RBA seem to have smaller hikes in thoughts. Will AUD/USD go decrease?

The Australian Dollar headed south after the RBA appeared to step again from aggressive tightening. The financial institution lifted the money fee goal by 50 foundation factors (bps) to 1.85% from 1.35%.

This is the passage that appears to have led the market to consider that the RBA is probably not as hawkish as beforehand thought –

The Board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.

A key piece of incoming knowledge is CPI and that won’t be forthcoming till late October. This signifies that the subsequent two conferences may see the RBA step again from 50 bps hikes and probably not change them at one or each conferences.

Australian 2Q CPI got here in not as sizzling as anticipated and this allowed some respiratory area for the RBA to draw back from an overtly hawkish stance.

The Federal Reserve lifted charges by 75 bp final week to cope with 9.1% CPI, whereas the Bank of Canada hiked by 100 bp final month to fight 8.1percentCPI.

Earlier within the day, Australian constructing approvals got here in higher than anticipated at -0.7% month-on-month for June in opposition to -5.0% anticipated and the earlier month’s red-hot 9.9%.

Economic knowledge prior to that has largely been robust with the June unemployment fee coming in at multi-generational lows of three.5% in opposition to 3.8% forecast and three.9% beforehand.

Looking forward, Australia’s commerce steadiness for June shall be launched on Thursday. It stays to be seen if May’s blistering AUD 15.7 billion surplus might be backed up with one other strong quantity.

It would seem that the financial knowledge will want to be very robust for the RBA to hike by greater than 25 bps at both of their September or October conferences. AUD/USD could come beneath additional stress if that is still to be the case.

The full assertion from the RBA might be learn right here.



Chart created in TradingView

— Written by Daniel McCarthy, Strategist for

To contact Daniel, use the feedback part under or @DanMcCathyFX on Twitter

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