Australian dollar rise as the RBA Meeting Minutes highlighted the significance of upholding a restrictive monetary policy.

Following the People’s Bank of China’s (PBoC) interest rate decision, the Australian dollar (AUD) made an effort to continue its gains for the fourth day in a row on Wednesday. In November, the Monetary Policy Committee (MPC) of the PBoC decided to maintain the benchmark interest rate at 3.1%.

Trump administration to implement pro-inflationary policies, the US dollar remains stable as investors expect.

As the US dollar (USD) strengthens on safe-haven flows due to rising tensions in the Russia-Ukraine conflict, the AUDUSD pair may experience downward pressure. Ukraine launched US-provided ATACMS missiles against Russian territory for the first time late Tuesday, according to a Reuters report, marking a major escalation on the 1,000th day of the war. However, after Russian Foreign Minister Sergei Lavrov declared that the government would “do everything possible” to avoid a nuclear war, market worries somewhat subsided.

According to the minutes of the Reserve Bank of Australia’s (RBA) November meeting, the board of the central bank is still concerned about the possibility of further inflation, highlighting the necessity of a restrictive monetary policy. Additionally, board members stated that there is no “immediate need” to change the cash rate, but they did leave the possibility of future adjustments open because nothing is definitive.

The USD (US dollar) remains stable on Wednesday, following three days of losses, under pressure from Tuesday’s lower-than-expected economic data. However, as investors expect pro-inflationary policies from the incoming Trump administration, such as tax cuts and higher tariffs, the downside for the greenback might be limited. These actions might increase inflation, which might persuade the Fed to reduce interest rates more gradually.

Daily Market Update:The hawkish sentiment surrounding the RBA supports the Australian dollar.

The president of the Federal Reserve Bank of Kansas City, Jeffrey Schmid, said Tuesday that he anticipates both employment and inflation to approach the Fed’s goals. Rate cuts, according to Schmid, indicate the Fed’s confidence in inflation moving in the direction of its 2% target. Additionally, he pointed out that although significant budget deficits won’t always cause inflation, the Fed might have to raise interest rates to offset possible pressures.

On Tuesday, a representative of China’s National Development and Reform Commission (NDRC) said that the nation has “ample policy room and tools to support economic recovery.” The official was optimistic about China’s economic future and predicted that the recovery momentum would continue into November and December. Since Australia and China are close trading partners, any shift in the Chinese economy could have an effect on the Australian markets.

Fed Chair Jerome Powell emphasized the economy’s resilience, strong labor market, and ongoing inflationary pressures while downplaying the possibility of rate cuts in the near future. According to Powell, “The economy is not sending any signals that we need to be in a hurry to lower rates.”

Chicago Fed President Austan Goolsbee said on Friday that When interest rates fluctuate, markets frequently overreact. Goolsbee underlined how crucial it is that the Fed proceed cautiously and gradually in its pursuit of the neutral rate.

While preserving market confidence in a possible rate cut in December, Boston Fed President Susan Collins moderated expectations for further rate cuts in the near future. Collins said, “I don’t see a big urgency to lower rates, but I want to preserve a healthy economy.”

RBA Governor Michele Bullock stressed last week that interest rates will not change until the central bank satisfied with the outlook for inflation.

RBA Governor Michele Bullock stressed last week that interest rates will not change until the central bank satisfied with the outlook for inflation because they are currently restrictive enough.

October saw a 0.4% month-over-month increase in US retail sales, which was higher than the 0.3% market forecast. Furthermore, the November NY Empire State Manufacturing Index was released a surprising increase, showing strong manufacturing activity, at 31.2 as opposed to the predicted 0.7 decline.

China’s retail sales increased by 4.8% year over year in October, exceeding both the 3.2% increase in September and the 3.8% increase that anticipated. In contrast, industrial production increased by 5.3% year over year, which was less than the 5.6% growth that predicted and the 5.4% growth that was observed during the prior period.