At 9:30 pm Eastern Time tonight, the Reserve Bank of Australia (RBA) will be publishing their latest round of monetary policy meeting minutes. While there is a chance that their intentions could come across as more hawkish than expected, they currently have little reason to be. Despite relatively low unemployment at 3.5%, steady GDP growth, and annual inflation having increased by a full percentage point to 6.1%, the Australian economy has not overheated in a manner comparable to that of other countries.
Because their inflation threat is not nearly as dire as that faced by the US, the UK, and the EU, the RBA’s 50 bp rate hikes understandably pale in comparison to the Fed and the European Central Bank’s 75 bp hikes, or the Bank of Canada’s willingness to utilize a full 100 bp hike. Because of this disparity in economic circumstances, there is a good chance that the RBA’s meeting minutes will favor AUD bears tonight as a fundamental catalyst. For those who are interested in watching this unfold or perhaps taking a position, here are 2 paths for Aussie bears, along with their respective EdgeFinder ratings and categories.
1) AUD/USD (Receives a -4, or ‘Sell’ Signal)
With big monetary policy decisions and economic projections coming on Wednesday from a hawkish Federal Reserve, there is a chance that significant bearish momentum could be coming. Institutional traders clearly have far more confidence in USD over AUD, as per COT data.
2) AUD/CHF (Receives a -4, or ‘Sell’ Signal)
The Swiss National Bank is expected to implement a 75 bp rate hike on Thursday, officially leaving negative interest rates behind. This marks a hawkish pivot that continues to set apart the Swiss Franc as a safe haven currency.
Bonus: AUD/CAD (Receives a -2, or ‘Neutral’ Signal)
Though perhaps less clear than with the two aforementioned pairs, the Bank of Canada’s approach to contending with inflation contrasts remarkably with the RBA’s, despite both CAD and AUD being commodity currencies. Also, Canada has a monthly round of CPI data due on Tuesday.
Yesterday, the Federal Open Market Committee (FOMC), the Federal Reserve’s policy-making body, implemented yet another 75 basis point interest rate hike. While this move was perfectly in line with market forecasts, Chair Powell’s comments following the subsequent press conference, in which he discussed the FOMC’s new set of economic projections, were significant. He continued to […]
Statistics Canada released a surprising new batch of inflation data this morning: month-over-month CPI failed to meet market forecasts, declining by 0.3% instead of the anticipated 0.1%. Rather than being an outlier, the other measurements of CPI mostly followed suit, as both year-over-year Trimmed CPI and Median CPI likewise failed to meet expectations. Trimmed CPI’s […]
At 9:30 pm Eastern Time tonight, the Reserve Bank of Australia (RBA) will be publishing their latest round of monetary policy meeting minutes. While there is a chance that their intentions could come across as more hawkish than expected, they currently have little reason to be. Despite relatively low unemployment at 3.5%, steady GDP growth, […]
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