RBA Rate Pause Coming?
The Australian Dollar has come under pressure over early European trading on Tuesday as traders digest the latest set of RBA meeting minutes released overnight. The minute showed the bank once again mulling the prospect of pausing its tightening campaign. Specifically, the minutes noted that “Members agreed to reconsider the case for a pause at the following meeting, recognizing that pausing would allow additional time to reassess the outlook for the economy.”
Uncertain Economic Outlook
With inflation having cooled following a surprise uptick in January, the minutes have further encouraged the view that the bank is likely to press pause on tightening in April. The minutes went on to say that members judged that monetary policy was now restrictive and that with the economic outlook more uncertain, it would likely be appropriate to pause tightening to assess its impact. Additionally, the minute showed that the RBA is concerned over the lag from tightening with many of the latest hikes yet to be fully felt within the economy.
Market Impact
Looking ahead, AUD should remain weak against certain currencies, such as EUR given the market’s still-hawkish ECB expectations. However, against currencies such as JPY, which is weakening due to reduced safe-haven demand, further strength is likely if risk appetite continues to pick up.
Technical Views
AUDUSD
The pair is attempting to breakout above the bear channel from YTD highs. However, for now, price is stalling around the .6681 level. With momentum studies turning bullish, if bulls can breach this level properly, focus turns to a test of .6857 next.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.