- AUD/USD has slipped firmly to near 0.6700 as RBA considered only 25 bps a viable option for March’s monetary policy.
- Recent upbeat Australian employment figures have conveyed that the fight against sticky inflation is extremely complicated.
- After the collapse of three mid-size US commercial banks, Fed is required to revive the confidence of investors.
The AUD/USD pair has slipped to near 0.6705 amid the release of the less hawkish Reserve Bank of Australia (RBA) minutes. The Board reiterated that further tightening of the POLICY would likely be required given inflation was still too high, the labor market tight and business surveys showed solid activity. RBA policymakers considered only a 25 basis points (bps) rate hike as a viable option for March’s monetary policy.
Investors should be aware of the fact that RBA Governor Philip Lowe hiked its Official Cash Rate (OCR) by 25 bps consecutively for the fifth time to 3.60%. Also, it was the 10th consecutive interest rate hike by the RBA in its battle against stubborn inflation.
Recent upbeat Australian employment figures have conveyed that the fight against sticky inflation is extremely complicated and RBA policymakers are still required to take tough decisions in times when inflation uncertainty has joined fears of a global banking meltdown.
S&P500 futures have extended Monday’s gains in the Asian session as investors have ignored the fears associated with upcoming monetary policy by the Federal Reserve (Fed), portraying further enhancement in the risk appetite of the market participants.
The US Dollar Index (DXY) has continued to remain sideways around 103.30 as investors are anticipating a less hawkish monetary policy and interest rate guidance. After the collapse of three mid-size United States commercial banks, Fed chair Jerome Powell is required to revive the confidence of investors, which could be done by mild tweaks to the interest rate policy.
Meanwhile, the demand for US government bonds has weakened further as the collaborative effort of various central banks of providing liquidity assistance in the form of US Dollars for supporting commercial banks has escalated inflation expectations. This has led to a rise in the returns offers on US Treasury bonds. The 10-year US Treasury yields have jumped to 3.5%.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD climbs to fresh monthly high above 1.0800
EUR/USD gathered bullish momentum and advanced to its highest level in a month above 1.0800 in the American session on Tuesday. The renewed selling pressure surrounding the US Dollar ahead of Wednesday's key inflation data provides a boost to the pair.
GBP/USD rises toward 1.2600 on renewed USD weakness
After falling toward 1.2500 in the early American session, GBP/USD regained its traction and turned positive on the day above 1.2550. The US Dollar struggles to find demand following the producer inflation data and allows the pair to stretch higher.
Gold extends daily recovery toward $2,350
Following Monday's decline, Gold stages a rebound toward $2,350 on Tuesday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% after April producer inflation data, allowing XAU/USD to hold its ground.
Ethereum knocking at support’s door
Crypto market capitalisation rose 0.8% over the past 24 hours to 2.2 trillion, but growth exceeded 2% for most of the period. However, it dipped at the start of active European trading, temporarily returning to levels of a day ago.
PPI surprises on the upside, but CPI may not follow suit
US producer price data for April surprised on the upside, suggesting that inflation pressure at the start of the inflation pipeline could be building once again. Final demand PPI rose to 2.2% from 1.8%.