- AUD/USD has encountered the 0.7100 resistance amid sky-rocketing Australian inflation.
- The RBA may find an interest rate peak at 3.60% by June in CY2023.
- Weaker US yields are weighing on the US Dollar as the Fed is expected to announce a smaller rate hike ahead.
The AUD/USD pair has touched the round-level resistance of 0.7100 for the first time in the past five months amid fresh highs in the Australian inflation rate at 7.8% on an annual basis for the fourth quarter of CY2022. The annual CPI has been released stronger than the expectations of 7.5% and the prior release of 7.3%. On a quarterly basis, the inflation rate has climbed to 1.9% vs. the consensus of 1.6% and the former release of 1.8%.
There is no denying the fact that a stronger-than-projected Australian inflation rate is going to compel the Reserve Bank of Australia (RBA) for hiking interest rates further in its February monetary policy meeting. An Australian Financial Review survey of 34 economists conveys that RBA Governor Philip Lowe to continue hiking interest rates further to 3.60%. The RBA is expected to hike its Official Cash Rate (OCR) by 25 basis points (bps) in February and June. Also, one of the outcomes of the survey is that the first post-pandemic-era rate cut will be in play by March 2024.
Earlier this week, Australian Treasurer Jim Chalmers cited that the worst part of the country's inflation crisis was over. He believes "The Australian economy will begin to soften a bit this year and that is the inevitable likely consequence of higher interest rates and a slowing global economy.” Fresh highs in the inflation rate indicate that the interest rate peak has not been found and the worst is not over yet.
Meanwhile, S&P500 futures have witnessed a marginal recovery after falling sharply in early Asia. Amid the absence of recovery signs in the 500-US stock basket futures, risk-perceived assets are still at risk and investors might avoid them further. The US Dollar Index (DXY) is struggling in sustaining above the immediate resistance of 101.50, weighed down by weaker yields. Also, the rising chances of a smaller interest rate hike by the Federal Reserve (Fed) in its February monetary policy is impacting the US Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD hovers around 1.0800 ahead of NFP
EUR/USD recovered from three-week lows and peaked at 1.0817. It is hovering around the 1.800 area. The pair rose on Thursday supported by a weaker US Dollar amid risk appetite. The focus turns to Friday’s NFP report.
USD/JPY remains volatile below 144.00 after Japan's GDP miss
USD/JPY is moving back and forth while below 144.00 in Friday's Asian trading. The pair recovered ground after Japan's Q3 GDP missed estimates. However, the Yen holds the upper hand against the US Dollar on hints of BoJ's policy pivot. US NFP awaited.
Gold eyes acceptance above $2,050 on dismal US Nonfarm Payrolls data Premium
Gold set new all-time highs this week at $2,144.48 in a hard bid rally early Monday, and the XAU/USD has spent the rest of the week in thin trading above $2,000 after paring away Monday’s opening gains. US NFP data is in focus for a fresh directional impetus.
Bitcoin price could retrace to $42,000 if US Nonfarm Payroll comes in at 180,000
Bitcoin price just like other assets, is highly impacted by the macro-financial developments. This includes the Nonfarm Payrolls (NFP) report released by the Bureau of Labor Statistics (BLS) of the United States. This time around, the NFP data is expected to cause a dip in the value of BTC.
US NFP Forecast: Nonfarm Payrolls gains expected to accelerate slightly in November
The high-impact Nonfarm Payrolls (NFP) data from the United States (US) will be published by the Bureau of Labor Statistics (BLS) on Friday at 13:30 GMT.