The Australian Dollar remains hostage to the US Dollar as global macro factors outweigh the prospect of the RBA looking to stamp out pesky inflation. AUD/USD and AUD/JPY are in focus.
Overall, the market does not appear to be listening to the RBA. This is what they have said over the last fortnight. Skip through this part if you have read my prior articles, but it is worth revisiting.
Tuesday 24th October - RBA Governor Michele Bullock said in regard to getting inflation down, “It is possible that this can be done with the cash rate at its current level but there are risks that could see inflation return to target more slowly than currently forecast. The Board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation.”.
Having said that, from what we know right now, a 25 basis point rate hike is on the cards next month, as cited in Tight monetary policy creates many kinds of discomfort and some cohorts of society feel the pain of these conditions far more than other parts. However, the cost of runaway prices is far greater.hike may or may not give the currency a boost. The US Dollar is doing its usual thing and dominating proceedings.
Such a circumstance could see AUD/JPY come under pressure which might assist Australia’s energy exporters in getting a bump up on their bottom line. Japan is the largest importer of Australian coal and liquified For the Aussie Dollar, the impending week might see retail sales, building approvals and the trade balance domestically.
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