RBA meeting: managing rate hike expectations – Forex News Preview 

The Reserve Bank of Australia announces its first policy decision of the year on Tuesday at 3:30 GMT.  The last time the Bank’s governor, Philip Lowe, spoke in mid-December, he told investors he didn’t think conditions for a rate hike would be met in 2022. Since then, the labour market has tightened further, while underlying measures of inflation have crept up to their highest levels since 2014. Will the RBA update its forward guidance to bring it more in line with market expectations, and would that offer much support to the sluggish Australian dollar?

Learning to live with the virus

The Omicron wave finally seems to be subsiding in Australia, which after ditching its zero-Covid policy, the nation is learning to live with the virus. Having gotten much of its adult population fully vaccinated, Australia has followed the UK approach, keeping much of the economy open while reimposing some modest curbs as the Omicron variant swept across the country.

The change in the government’s response to fighting the virus has been good news for the Australian economy. Overall employment is now bigger than what it was before the pandemic, consumer spending has strengthened notably in recent months and inflationary pressures have started to build. Although Omicron is expected to have dented growth in January, the impact will likely be short-lived.

Is it the end of the road for QE?

There’s a strong case therefore for the RBA to scrap its bond purchase programme early, possibly as soon as the February meeting. Policymakers had always set this meeting as the one where they would review the programme, but rather than further reducing its pace before ending it in May as previously signalled, there’s a good deal of pressure to wrap up QE now.

Australia’s consumer price index jumped by a stronger-than-expected 1.3% between the third and fourth quarters and although the annual rate was comparatively low at 3.2%, the RBA’s two closely watched gauges of underlying inflation climbed to the highest in more than seven years in Q4.

Markets unaligned with the RBA

While ending QE abruptly would definitely be seen as a hawkish tilt, what investors will be paying more attention to is the Bank’s forecasts for the cash rate, as well as for inflation and GDP growth in the quarterly Monetary Policy Statement due the following Friday. Governor Lowe had previously signalled that rates are unlikely to be lifted before late 2023 at the earliest. But markets not only think that the RBA will start to raise rates in 2022, they have fully priced in five increases.

This leaves a lot of room for disappointment. Yet, the intensifying rate hike bets have done little to boost the local dollar. The dimming global growth outlook due to Omicron and tightening monetary policy around the world, and more specifically for Australia, the economic slowdown in China, have been weighing on the aussie lately.

Aussie bulls hoping for hawkish surprise

Against the US dollar, the aussie is currently testing the $0.71 level after being unable to overcome resistance at its 50-day moving average (MA). If the RBA doesn’t bring forward its rate hike timeline, a move back towards December’s more than one-year low of $0.6991 is very possible.

In the bullish scenario, if Lowe flags a rate increase this year, aussie/dollar could make a push up towards the January peak of $0.7314 initially, before attempting to reach the 200-day MA just beneath the $0.74 level.

However, it remains to be seen whether the RBA is ready yet to make such a dramatic shift to its predicted rate path. Early 2023 might be seen as a more realistic timetable and policymakers will probably want to wait a while longer before committing to liftoff in 2022. Even if they were to surprise with a very hawkish forward guidance, it would likely come attached with conditions, such as wanting to see a significant pickup in wage growth.

Pinakabagong Balita

Aussie fires up ahead of jobs data and Australian federal election - Forex News Preview

Japan may shrink, but will the yen follow? – Forex News Preview

Dollar consolidates ahead of US retail sales as rate hike bets stall – Forex News Preview

Week Ahead – Data avalanche to keep spotlight on rate hike expectations

Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.

Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.

Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.

Gumagamit kami ng cookies para mabigyan ka ng mahusay na karanasan sa aming website. Magbasa pa o palitan ang iyong cookie settings.

Babala sa Risk: Maaaring malugi ang iyong kapital. Maaaring hindi nababagay sa lahat ang mga produktong naka-leverage. Mangyaring isaalang-alang ang aming Pahayag sa Risk.