AUDUSD falls as the RBA releases less hawkish minutes

The AUDUSD has fallen below 0.6700 as RBA minutes show that a rate rise was announced owing to inflationary concerns.

The AUDUSD pair has fallen below the round-level support of 0.6700. After the Reserve Bank of Australia (RBA) minutes for the May monetary policy meeting were released. According to the RBA minutes, it decided to raise interest rates. Due to rising inflation expectations. More rate hikes were needed owing to inflationary threats posed by sluggish productivity growth. Persistently high service inflation, and faster-than-expected rental increases.

Moreover Investors should be aware that RBA Governor Philip Lowe unexpectedly boosted interest rates by 25 basis points (bps) to 3.85%. The street expected the policy stance to remain constant because Australia’s inflation has been regularly dropping for the previous three months. Monthly inflation has already slowed dramatically from its peak of 8.4% in February to 6.3% in March.

Furthermore Policymakers at the RBA are Expecting a further slowdown in the Australian economy as a result of increased interest rates, which will have a significant impact on Australian inflation in the future.

Australia’s quarterly labor cost index is expected to rise to 0.9%.

The Australian Bureau of Statistics will release the Wage Price Index statistics for the first quarter of CY2023.  Which will be released on Wednesday. According to forecasts, quarterly labor cost index data will rise to 0.9% from 0.8% before. In addition, yearly data is predicted to increase to 3.6% from 3.3%. In the previous edition. An increase in labor cost index data would drive the RBA’s demand for more quantitative tightening.

According to the Congressional Budget Office, the United States faces a “significant risk” of defaulting on payment commitments.

Meanwhile, the US Dollar Index (DXY) has recovered to reach 102.40, as investors get concerned about US debt-ceiling discussions.

Moreover According to the Congressional Budget Office, the United States will If the government’s $31.4 trillion debt ceiling is not raised, the country faces a “significant risk” of defaulting on payment commitments by the first two weeks of June, with payment operations remaining shaky throughout May.