Tuesday saw a 1.5% decline in the value of the Australian dollar (AUD/USD), hitting 0.6404 as a result of the Reserve Bank of Australia’s dovish statement and announcement of an anticipated 25 basis point rate hike. The Australian dollar bounced back to start trading on Wednesday at 0.6440.
The Reserve Bank of Australia (RBA) is still worried about a slowdown in the Australian economy despite the 25 basis point rate hike. This is because consumer spending is still low and inflation risks are still very high.
The RBA’s pace of rate hikes may have been too little, too early to eat away at inflation expectations at the street level after the Aussie central bank stood pat on rates for four consecutive meetings.
Wednesday will see an appearance from Federal Reserve Chair Jerome Powell will be delivering speaking notes at a conference at the Division of Research and Statistics in Washington.
After last Friday’s Nonfarm Payrolls disappointment that sparked broad-market hopes of a decisive end to Fed rate hikes, investors will be watching the Fed head carefully.
Early Thursday sees November’s Australian Consumer Inflation Expectations, which last came in at 4.8% for October.
Tags aud/usd interest rate hike powell RBA
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