After a tumultuous week of central banks meetings and blockbuster economic data, including last Friday’s shocking US jobs report, the risk calendar looks relatively light in comparison this week:
Monday, February 6
Tuesday, February 7
Wednesday, February 8
Thursday, February 9
Friday, February 10
The Reserve Bank of Australia’s policy meeting on Tuesday is expected to see another 25bps hike which takes the benchmark cash rate to 3.35%.
The Australian central bank has already lifted rates at each of its monthly meetings, including four 50bp hikes from June to September.
The RBA then slowed the pace of tightening in October and pivoted to 25bp hikes with policy arguably already in contractionary territory.
This has fuelled some expectations that Tuesday’s hike might be the RBA’s last in this cycle.
But the recent inflation data showed that:
This is clearly going the wrong way for policymakers and more work needs to be done.
Looking ahead, forward-looking indicators are softening with house prices continuing to cool and the full impact of the RBA’s rate hikes still to be felt.
The AUD made new cycle highs last week at 0.71577 versus the US dollar but the major plunged after the blockbuster US employment report.
Prices have dipped below last week’s low at 0.69838 and is now testing support around the 50% Fibonacci level from 2022’s peak-to-trough price action.
Further south, AUDUSD’s 50-day simple moving average (SMA) may offer stronger support if either the Australian dollar weakens further or the US dollar climbs higher.
However, if the RBA can reassert its hawkishness, that may pull AUDUSD closer to its 21-day SMA and possibly even back above the psychologically-important 0.700 line.
With the big central bank meetings out of the way, this week brings with it the latest CPI data from the eurozone and focus on the Fed’s favoured inflation measure.
27 March 11:59
The dollar traded mixed against it peers in a narrow range yesterday and ahead of the pivotal FOMC rate decision later today. Investors have appeared a little more confident after the sharp selloff in risky assets early on Monday morning.
22 March 11:52
The European Central Bank is set to announce its rate decision at 13:15 GMT today (Thursday, March 16th). In short, EURUSD is perhaps likelier to react to market sentiment, rather than the fundamental actions of the ECB today.
16 March 11:14
More tightening would be good for the dollar which has struggled with the banking contagion issues.
15 March 10:53
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