The AUDUSD has dropped sharply as the RBA saw only 25 basis points as a credible alternative for March’s monetary policy.
The AUDUSD pair has dropped to roughly 0.6705. Following the release of the Reserve Bank of Australia (RBA) minutes. Which were less hawkish. The Board maintained that more policy tightening was expected given that inflation was still too high. The labor market was tight, and business surveys showed good activity. Just a 25-basis point (bps) rate rise was deemed a option for March’s monetary policy by RBA officials.
Investors should be aware that RBA Governor Philip Lowe raised the OCR by 25 basis points (bps) for the sixth time in a row, to 3.60%. It was also the RBA’s tenth straight interest rate rise in its fight against persistent inflation.
Recent positive Australian job numbers have demonstrated that combating sticky inflation is incredibly difficult.
According to Australian employment estimates. The struggle in opposition to sticky Inflation is exceedingly tricky. And RBA officials must continue to make difficult decisions at a time. When inflation uncertainty has joined worries of a worldwide banking crisis.
Furthermore S&P500 futures extended Monday’s advances in the Asian session. As investors overlooked concerns about the Federal Reserve’s (Fed) impending monetary policy. Indicating a further increase in market participants’ risk appetite.
The US Dollar Index (DXY) has remained flat around 103.30, as investors anticipate less aggressive monetary policy and interest rate projections. With the failure of three mid-sized US commercial banks, Fed Chair Jerome Powell is under pressure to restore investor confidence, which might be accomplished by minor changes in interest rate policy.
Furthermore, demand for US government bonds has further. As a result of the coordinated effort of several central banks to provide liquidity assistance in the form of US Dollars to support commercial banks. Which has heightened inflation forecasts. This has resulted in an increase in the yields offered on US Treasury bonds. The yield on a 10-year US Treasury note has risen to 3.5%.
