The consensus is for the RBA to hike by 25bp tomorrow

What has happened since the last RBA meeting?

10^th November: Australia's central bank says nearer to point when it can wait on rates (Reuters)
CPI fell to 6.9% y/y, down from 7.4% and beneath the 7.5% - suggesting inflation has peaked
Governor Lowe reiterated his belief that the economy can have a soft landing
PMI’s continued south, business sentiment has been flat
Consumer inflation expectations hit a record high according to one survey
OIS curve is pointing lower as the case for a higher terminal rate diminishes

The RBA’s cash rate currently sits at 2.85%, after hiking rates for a record seven consecutive meetings totalling 275bp. And despite being a late starter compared to the RBNZ, Fed and pretty much everyone – the RBA continue to believe the terminal rate will remain lower than their peers. For comparison, RBNZ have an OCR of 4.25% and expected to rise to at least 4.5%, yet a recent poll suggests the RBA’s terminal rate will be around 3.6% next year.

I expect the RBA to hike rates for a record eight consecutive meeting tomorrow by 25bp. With that said, we shouldn’t discount the potential for a hold – which I’m sure consumers would love. Yet they’re more likely to hike to 3.1% as they do not meet again until February, so technically January is kind of a pause. But the case for a pause is certainly building. Some measures of inflation expectations are moving lower, and the monthly inflation print suggests inflation has peaked at 7.4% y/y – as it fell to 6.9%, compared with 7.5% expected. All 30 economists polled by Reuters expect the RBA to hike by 25bp tomorrow, however money markets currently estimate just a 56% probability – which means there’s a 44% chance that they will pause.

AUD/USD 4-hour chart:

The symmetrical triangle breakout on AUD/USD remains in play on the 4-hour chart, and prices pulled back into a support cluster following Friday’s NFP report. Next target for bulls to consider remains 69c, so we’re hoping prices can now remain above Friday’s low and revert higher.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.