RBA

AUD/USD is benefitting from speculation about another interest rate hike from the RBA after a higher-than-expected CPI report and strong retail sales figure - see the key levels to watch from here!

Concerns that headline employment figures could be lagging a worse picture alongside a lack of updated service inflation figures prompted the RBA to hold rates in June. And that makes the quarterly CPI report in a few weeks all the more important.

There is now little doubt underlying inflationary pressures in Australia are accelerating again, increasing the risk the Reserve Bank of Australia (RBA) will be forced to hike interest rates again for the first time since November. AUD/USD, Australian bond yields surge while ASX 200 tanks.

A relatively hawkish meeting from the RBA has supported AUD over the past 24 hours, sent AUD/JPY to an 11-year high and made next week's inflation report the more important.

The RBA has evidence to justify continued vigilance towards continued upside inflation surprises, vowing it will do what it is necessary to bring it back to the 2.5% midpoint of its inflation target. But it’s not yet compelling enough to warrant hiking rates, choosing to retain a neutral bias in June.

For the first week in a while, US data is not dominating the market focus. With a key US inflation report and FOMC meeting freshly in the rear-view mirror, markets can now shift attention to domestic data. Three top-tier central banks meet next week, including the RBA on Tuesday, followed by the Swiss National Bank (SNB) and Bank of England (BOE) on Thursday. UK inflation data on Wednesday could set the tone for what to expect at future BOE meetings. Flash PMIs across Asia, Europe, and the US then close out the week, which can shape expectations for future growth and inflationary pressures.

The performance of mainland Chinese stock indices and minutes from the RBA May monetary policy meeting should be on the radar for anyone trading AUD/USD or ASX 200 futures on Tuesday. With little top tier data or event risk to navigate, they loom as the most likely drivers of Australian financial markets.

With unemployment spiking and broader measures of labour market slack increasing, the risk of strong wages growth sparking renewed inflationary pressures looks to have past.

Bargain hunting by cost conscious consumers saw Australian retail sales volumes accelerate slightly in the final three months of 2023, reducing the risk of a negative growth when the December quarter national accounts are released in early March.

An inflationary ISM report saw bets of multiple Fed cuts reduced to send the US dollar index to an 11-week high. If the RBA come out with a dovish meeting today, AUD/USD could be headed for 64c.

EUR/AUD is on track to record its fifth consecutive daily gain to start the trading week, moving the pair to within touching distance of the downtrend bulls have been thwarted at on several separate occasions dating back to the middle of last year.

Monday could be off to a volatile start if Jerome Powell’s 60-minutes interview causes a stir for global markets. Whilst the RBA meeting, press conference and updated forecasts could drive sentiment for AUD and the ASX next week

AUD/USD suffered its worst month in 11 in January, after traders scaled back bets of several Fed cuts this year which helped the US dollar rally and force AUD/USD -3.5% lower for the month. The focus now shifts to next week's RBA meeting.

There’s a growing risk the RBA may end up cutting interest rates sooner than US Federal Reserve with a slowdown in underlying inflationary pressures in the December quarter seeing markets shift forward expectation for a 25 basis point rate cut to early May.

Australia’s Q4 data report will be warmly welcomed for those calling for RBA cuts, with all headline data points coming in beneath expectations.

The AUD/USD's global focus may pause temporarily later this week when Australia’s inflation indicator is released, containing a whole raft of new information on what’s happening with prices at the consumer level, especially for services.

The tone of the Reserve Bank of Australia’s (RBA) minutes has come across as more hawkish than that of the monthly monetary policy statement under the leadership of Michele Bullock as Governor, pointing to the risk of a similar outcome when the minutes of the RBA’s December meeting are released later Tuesday.