RBA Hikes, Signals More to Come
In line with expectations, the RBA hiked rates by a further .5% at its September meeting overnight. On the back of the hawkish guidance issued at the last meeting, the move was well signalled. With this lates increase, which marks the fifth consecutive monthly rate hike from the RBA, rates in Australia are now sitting at 7%-year highs, reflecting a swift change from the record lows at which rates started the year.
Growth Concerns
Along with the latest hike, the RBA maintained its hawkish guidance on rates, signalling that further such hikes are likely as it continues to battle soaring inflation. Critics have shared concern over the growth impact of continued, aggressive tightening. However, the RBA (as we’ve heard from the Fed and other central banks), was keen to keep the focus firmly inflation-targeting. The RBA did, however, acknowledge downside risks in the outlook regarding the domestic impact on real-incomes and what this means for consumption going forward, noting an “important source of uncertainty”.
On the back of the meeting, AUD has been relatively muted. Given the hike was well signalled and with little fireworks during the post-meeting presser, traders instead appear to be focusing on the downside risks acknowledged by the RBA. Concerns over the impact on property prices are also causing some pause-for-thought with regard to investor sentiment.
Technical Views
AUDUSD
The failure at .7132 has seen the market reversing sharply lower with now trading back under the .6847 level and close to retesting the broken bear channel top and YTD lows around .6681. This is a key support area for the pair and a break here will be firmly bearish, encouraging momentum traders to add shorts. Bulls need to see price quickly back above .6987 to alleviate near-term bearishness.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.