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The first minutes of the FOMC in 2023 showed that some Fed officials wanted a 50 bps rate hike. Policymakers’ worries are linked to a tight labor market and commented inflation risks are tilted upwards.
The AUD/USD pair prolonged its losses during the Wednesday session and dropped nearby the day’s low of 0.6808 after the release of the Federal Open Market Committee (FOMC) minutes, which revealed that “few participants” favored a 50 bps rate hike. At the time of writing, the AUD/USD exchanges hands at 0.6826.
The FOMC revealed in its minutes that some Federal Reserve policymakers wanted a more aggressive rate hike, with minutes citing that “a few participants favored raising rates by 50 bps.” Further, all the Fed board members agreed that more rate hikes are needed to achieve the Fed’s target and that balance sheet reduction would continue according to the plan.
Fed policymakers reiterated that inflation risks remain skewed to the upside, including China’s reopening and Russia’s invasion of Ukraine, reiterating that the labor market remains tight. Participants said the economic outlook is weighed on the downside, and some participants saw prospects of a recession in 2023.
The AUD/USD 1-hour chart shows a spike towards 0.6832 before the AUD/USD reversed its course, breaching south of the S1 daily pivot point at 0.6825. Volatility has increased, and after reaching a low of 0.6808, as of late, the AUD/USD is tumbling sharply, eyeing a break below the 0.6700 mark.
