![]() The difference between trading assets and CFDs ![]() AUD/USD technical analysis: Double top signals bearish reversal The market anticipates a total of 90 basis points of RBA increases by June 2023, but if domestic and global economic concerns continue to rise, along with this quarter's decline in inflation, the RBA may fall short of expectations and put downward pressure on the Australian dollar. It's possible that by the end of the fourth quarter, Australia's inflation rate will have already begun to show signs of a significant deceleration. S&P Global Australia Services PMI fell to 47.2 in November 2022 from 49.3. In addition to October's negative retail sales, the service sector is also exhibiting signs of contraction. The RBA stated in November that it is dedicated to battling inflation, but that the degree and timing of rate hikes will be determined by incoming data. These comments were rather dovish.Īfter December, the next RBA meeting will be in February 2023, and another 25-basis-point increase is not taken for granted. The Reserve Bank of Australia's Governor, Philip Lowe, recently expressed a more flexible approach to monetary policy, while Deputy Governor Michelle Bullock stated that interest rates would likely rise further, but that a halt in rate hikes is approaching. In November, the RBA also raised by 25 points, although missing expectations and becoming one of the first major central banks to slow tightening amid a weakening economic outlook. ![]() Since May, the Australian cash rate has been hiked by a total of 300 basis points. Will the Aussie face more selling pressure in the near term, or will the weakening US dollar environment keep the AUD bid? AUD/USD and Chinese equities are strongly correlated In November, the RBA reaffirmed its stance that it will do whatever is necessary to bring inflation to target levels, but also hinted that the size and timing of future rate hikes would be dependent on incoming data. Retail sales saw their first monthly decline this year and their lowest figure since December 2021 as rising interest rates and cost-of-living concerns in Australia restrained family spending.įears over Chinese growth combined with a slowing Australian economy may put pressure on the RBA to halt its interest rate cycle in Q1 next year. In October, retail sales in Australia surprisingly fell 0.2% month-over-month, disappointing analysts ’ expectations of a 0.5% increase and erasing a 0.6% increase from the previous month. ![]() Covid restrictions are now causing protests around the population that risk strong repression by the central authorities and, as a result, may have a detrimental economic impact on Chinese growth.ĭomestically, we start to notice declining consumption in Australia. The Chinese government, which is still committed to the Covid zero strategy, has dispelled the illusory hopes for an economic reopening that were breathed at the beginning of November. Australian dollar coins and Australian flag in the background – Photo: Shutterstockįears about lockdowns in China and weaker-than-anticipated economic data are exerting renewed downward pressure on the Australian dollar ( AUD/USD), which had gained 5% in November and roughly 9% from its October lows.
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