-
RBA minutes state further rate hikes possible.
-
Australian consumer confidence sinks.
-
Australian wage growth to be released on Wednesday.
The Australian dollar has taken investors on a wild ride over the past few days but has settled down on Tuesday. AUD/USD is trading at 0.6687 in Europe, down 0.13% on the day.
RBA minutes indicate more rate hikes possible
The RBA released the minutes of its meeting earlier this month. That meeting was a barn-burner, with the RBA stunning the markets with a 25 basis-point hike. The central bank had finally taken a pause in its rate-tightening cycle in April and given the lukewarm economy, a second-straight pause seemed a safe bet, but in the end, the RBA opted for a rate increase.
The minutes noted that the decision to pause or hike was “finally balanced”, with strong arguments for both. In the end, policy makers opted to lift rates in order to lower the risks of inflation becoming entrenched in the economy. Strong population growth, low rental vacancy rates and a tight labour market supported a rate hike.
What can we expect next from the RBA? The minutes didn’t provide any insights, stating that more rate hikes “may be required” to drive down inflation, but that would “depend on how the economy and inflation evolve”. In other words, don’t look to the RBA for guidance, as rate policy will depend on economic data, particularly inflation.
Australian consumer confidence fell sharply, but the Australian dollar didn’t react. Westpac Consumer Confidence plunged 7.9% in May, a sharp reversal from the 9.4% gain in April and much worse than the estimate of -1.7%. The Westpac survey found that consumers were very pessimistic about the surprise rate hike and expect mortgage rates and house prices to move upwards.
We’ll get a look at wage growth on Wednesday, which is expected to rise in the first quarter. The RBA will be watching carefully and an unexpected reading could see the Aussie show some volatility.
AUD/USD technical
-
AUD/USD is putting pressure on resistance at 0.6699. This is followed by 0.6761.
-
0.6579 and 0.6517 are providing support.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD holds steady near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.