The Australian Dollar found some traction ahead of the RBA monetary policy decision in the aftermath of accelerating inflation. Will a rate hike further boost AUD/USD and AUD/JPY?
RBA Governor Michele Bullock assumed the helm in September in the aftermath of a government review of the bank and has made it clear that more effective communication would be an objective on her watch.
“The Board has a low tolerance for a slower return of inflation to target than currently expected. Whether or not a further increase in interest rates is required would, therefore, depend on the incoming data and how these alter the economic outlook and the evolving assessment of risks.” Post-CPI at a Senate estimates hearing, Ms Bullock would not be drawn into stipulating that a rate hike would definitely happen as it was still being considered. Some in the market and media misinterpreted this as being dovish.
In any case, the labour market remains tight, inflation is getting a head of steam and housing prices are on the gallop. The RBA’s current stance is less restrictive than in many other similar jurisdictions that have less price pressures. On the downside, support may lie near a breakpoint at 0.6450 or the previous lows of 0.6285, 0.6270 and 0.6170. The latter might also be supported at 161.8%
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