AUD/USD whipsaws above 0.6700 as hawkish RBA Minutes join upbeat China Q1 GDP

Members commenced their discussion of the global economy by noting that inflation remained high and well above central banks’ targets. Inflation in many economies had declined from earlier peaks but progress in returning inflation to target had slowed. Recent monthly core inflation data had been higher than expected in a range of advanced economies. Nevertheless, inflation in advanced economies was still expected to decline over coming quarters as economic activity slowed and input price pressures continued to dissipate. Indicators of domestic demand across advanced economies had been mixed. Retail sales had increased in early 2023 in a few economies, although volumes generally remained below their peaks. The housing sector remained subdued in many economies, reflecting the tightening of monetary policy over the prior year. Most of these indicators pre-dated the financial stability concerns and financial market volatility prompted by bank failures in the United States and Switzerland. However, members observed that very timely measures of activity in the services sector had been resilient; survey measures of services output had remained solid in March in many countries and household sentiment in the United States had been little affected. At the same time, some commodity prices had declined. Members noted that labour markets had remained tight, but less so than a few months earlier. Employment growth had moderated in a number of advanced economies over the preceding six months. Although job vacancy rates had declined, they remained unusually high. Central banks and Consensus Economics’ panel were forecasting that unemployment rates would increase gradually from their multi-decade lows in many advanced economies. Wages growth had slowed in the United States and United Kingdom but remained above rates consistent with their central banks’ inflation targets. Domestic economic activity in China had begun to recover rapidly in the early part of the year from earlier COVID-19-related disruptions. Services sector activity, retail sales and industrial production had all recovered strongly in the first two months of 2023. Leading indicators suggested an improvement in property-related tweet at 9:32pm: RBA Minutes: Board Considered Rate Hike At April Meeting, Before Deciding To Pause -Agreed Stronger Case To Pause And Reassess Need For Tightening At Future MeetingsRBA minutes show strong case to pause and reassess need for tightening at future meetings • Board considered rate hike in April, before deciding to pause. • Agreed that there is a stronger case to pause and reassess the need for tightening. • Assessing data on inflation, jobs, consumer spending and business conditions. • Inflation is still too high. • Labour market had loosened a little but is still very tight. • Bank stress causing tighter financial conditions globally, a headwind for the world economy. It is interesting to note that they did "consider" a rate hike earlier this month but let's be real, actions speak louder than words - especially at this point in the tightening cycle. In case you need a reminder, they also offered up a subtle change to the forward guidance as highlighted at the time here.