Share:

The Australian dollar has posted slight gains at the start of the trading week. AUD/USD is trading at 0.6801, up 0.10%.

RBA likely to deliver 25-bp hike

The Reserve Bank of Australia meets on Tuesday and is expected to hike by 25 bp for a third straight time. This would bring the cash rate to 3.10%. There is a chance that the RBA could take a pause and not raise rates, although the case for a modest 25 bp seems stronger. Inflation remains the RBA’s number one priority, and the Bank’s steep rate-tightening cycle is showing results, with CPI falling to 6.9% in October, down from 7.4% a month earlier. Still, it is premature to say that inflation has definitely peaked, and consumer inflation expectations measures have been mixed.

The RBA’s rate policy has been a bumpy road, which led to Governor Lowe to issue an apology about rate policy last week. Lowe said that it was regrettable that people listened to the RBA saying it wouldn’t raise rates before 2024 but then delivered seven oversized rate hikes in 2022. Many Australians took out mortgages based on the RBA assurance but are now getting squeezed by huge mortgage payments.

The week ended with the US employment report, which was stronger than expected. The economy created 263,000 jobs in November, slightly lower than the October reading of 284,000 and stronger than the consensus of 200,000. Wage growth also outperformed, as the reading of 5.1% y/y was up from 4.9% and beat the forecast of 4.6%. The labor market continues to show a surprising resiliency and the increase in wage growth will drive inflationary pressure. The solid employment numbers haven’t changed the likelihood of a 50-bp hike in December (80% according to CME FedWatch), but should serve as a reminder to the markets that the Fed’s tightening cycle could continue into 2023.

AUD/USD technical

  • AUD/USD faces resistance at 0.6878 and 0.6962.

  • There is support at 0.6760 and 0.6676.

AUDUSD

Share: Feed news

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.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD struggles near 1.0750, focus on ECB-speak, Powell

EUR/USD struggles near 1.0750, focus on ECB-speak, Powell

EUR/USD is consolidating gains near 1.0750 in the early European morning. The main currency pair is capitalizing on a broad-based US Dollar retreat, in the face of sluggish Treasury bond yields and a mild risk-on market profile. ECB commentary and Powell's speech eyed. 

EUR/USD News

GBP/USD clings to gains around 1.2050 ahead of Powell

GBP/USD clings to gains around 1.2050 ahead of Powell

GBP/USD is trading close to 1.2050, preserving gains ahead of the London Open. The upbeat market mood and renewed Brexit optimism boes well for the Pound Sterling while the US Dollar retreats with Treasury yields ahead of Fed Chair Powell's speech. 

GBP/USD News

Gold encounters barricades around $1,875 as USD Index attempts recovery

Gold encounters barricades around $1,875 as USD Index attempts recovery

Gold price (XAU/USD) is facing pressures in recovery extension above the critical resistance of $1,875.00 in the Asian session. The precious metal has sensed selling interest as the US Dollar Index (DXY) has attempted a recovery after correcting to near 103.10.

Gold News

Will Bitcoin price test $20,000 again?

Will Bitcoin price test $20,000 again?

Bitcoin price shows clear signs of distribution occurring on the four-hour chart, which indicates the possibility of a trend reversal. Moreover, BTC has been consolidating for more than two weeks with no direction in sight.

Read more

Central banks, markets and the economy: Three times wrongfooted

Central banks, markets and the economy: Three times wrongfooted

In the US, financial conditions have eased in recent months and weighed on the effectiveness of the Fed’s policy tightening. Jerome Powell recently gave the impression of not being too concerned, so markets rallied.

Read more

Majors

Cryptocurrencies

Signatures