Can the RBA bring the aussie back to life? – Forex News Preview

After raising interest rates by another 50bps in September, the RBA meets again to decide on monetary policy this Tuesday at 03:30 GMT. Following remarks by Governor Philip Lowe that the pace of rate hikes may slow from here onwards, investors are leaning slightly towards a 25bps increase this time. However, they see a higher terminal rate than they’d been projecting ahead of the prior meeting. Ergo, they may be eager to find out whether they are right or not, so they can adjust their aussie positions accordingly.

Governor Lowe signals slower rate hikes

When they last met, RBA policymakers increased the cash rate target by 50bps, reiterating their commitment to return inflation back within their 2-3% target range. Given that this was a gathering with no updated economic projections, they maintained the view that inflation will rise further this year to around 7.25%, slow down to 4% in 2023, and touch the upper end of their target range in 2024.

That said, when testifying before parliament a couple of weeks ago, RBA Governor Philip Lowe said that very soon they will not need to hike by 50bps as interest rates approach their normal setting. Though he added that interest rates are still too low. That’s maybe why market participants are now leaning slightly towards a 25bps rate increase, but they project a higher terminal rate. More specifically, they are assigning around a 52% probability for a quarter-point increase, with the remaining 48% pointing to another double hike. As for the terminal rate, they now see it at 4.3% in June, while ahead of the prior meeting, they saw it at 3.9% in May.

Data continue to support further tightening

Since then, the only top-tier data released from Australia was the GDP for Q2 and the employment report for August. In contrast with other major economies, economic growth accelerated during that quarter, which combined with the fact that the Chinese economy shrank more than 2% during that same quarter, highlights how resilient the Australian economy is.

Yes, the unemployment rate ticked up to 3.5% from its record low of 3.4% but adding to the equation the rebound in employment change and the increase in participation rate, this may have been due to good reasons. In other words, the unemployment rate may have increased due to more people being encouraged to actively start looking for a job.

All this, combined with the smaller than expected slowdown in retail sales as well as the rise in the NAB business confidence index, suggests that the chance for another double hike may be bigger than the market pricing suggests. After all, although 1-year inflation expectations have come off their highs – as calculated by the Melbourne Institute – they remain well above the upper end of the RBA’s 2-3% target range.

What’s in store for aussie?

Another 50bps hike could support the Australian dollar at the time of the release, and a hawkish language suggesting that they will not slow the pace of rate increases yet, could add extra fuel. On the other hand, a quarter-point liftoff could validate Lowe’s remarks over slower hikes and could push the aussie off the cliff.

Even in the former case though, a potential recovery may not last for long, especially against the US dollar. Due to its risk-linked status, the aussie has been feeling the heat of the deteriorating broader sentiment. While the Australian economy is doing well, expectations over higher interest rates elsewhere have raised concerns over a global recession, pushing the aussie to fourth place among the major currencies in terms of best year-to-date performance. Ahead of the prior meeting, it was holding the third place.

So, rebound or not, aussie/dollar may be destined to come under renewed selling interest soon. A break below Wednesday’s low of 0.6365 would confirm a lower low on the daily chart and take the action into territories last seen in April 2020. The next zone to consider as a support may be the low of April 21 of that year at 0.6250, the break of which could carry larger bearish implications and perhaps encourage the bears to put the round number of 0.6000 on their radars.

For the outlook to change, a break above the high of September 13 at 0.6915 may be needed. This could confirm the break above the downside resistance line drawn from the high of April 5 this year, but for any gains to have the potential for more and sustained extensions, the global market sentiment may have to take a 180-degree spin first.

면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.

온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.

이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.

우리는 웹사이트에서 최고의 경험을 전해드리기 위해 쿠키를 사용하고 있습니다. 자세히 읽거나 쿠키 설정을 변경하세요.

리스크 경고: 고객님의 자본이 위험에 노출 될 수 있습니다. 레버리지 상품은 모든 분들에게 적합하지 않을수 있습니다. 당사의 리스크 공시를 참고하시기 바랍니다.