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FX: Picking off the doves
A core theme across international FX and rate markets has been the re-pricing of monetary policy in response to rising inflation around the world. This has come at a difficult time for the most dovish central banks which have tried to hold onto extreme forms of forward guidance. In the Reserve Bank of Australia’s (RBA) case, forward guidance had been backed by a commitment to target the April 2024 government bond at a yield of 0.10%. This week, the RBA abandoned that target with the yield on that bond above 0.70%. The re-pricing of the RBA cycle has surely helped the Australian dollar outperform over the last ... (full story)