- RBA is ready to accelerate or temporarily halt rate hikes as required.
- The RBA raised its cash rate by 25bps to a nine-year high of 2.85%.
- Markets are awaiting the Fed’s interest decision.
Today’s AUD/USD price analysis is slightly bullish as the RBA invites the possibility of getting back to bigger rate hikes. The governor of Australia’s central bank stated Tuesday that additional rate hikes were likely required to control inflation. The bank was prepared to accelerate rate increases or temporarily halt them as needed.
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On Tuesday, the central bank increased its cash rate by 25 basis points to a nine-year high of 2.85%. After four hefty increases of half a point, it moved to a 25 basis point increase in October.
Lowe emphasized that there were reasons to be cautious about rate increases, including the Russian-Ukrainian conflict, rising living expenses, and a more deteriorated global economy.
As a result, the RBA must tread carefully to avoid sending the economy into a recession while still containing inflation.
Although the board was not following a predetermined course, he indicated that further interest rate rises would likely be required, with inflation predicted to peak at roughly 8% this quarter.
“If we need to step up to larger increases again to secure the return of inflation to target, we will do that,” said Lowe. “Similarly, if the situation requires us to hold steady for a while, we will do that.”
AUD/USD key events today
There will be a lot of volatility when the Fed interest rate decision is made later today. Markets are expecting a 75bps increase. There will also be the ADP nonfarm employment change. Finally, investors will pay attention to the FOMC press conference for clues on future rate hikes.
AUD/USD technical price analysis: RSI showing bullish strength amid consolidation
Looking at the 4-hour chart, we see the price trading slightly below the 30-SMA and RSI above 50. The price is chopping through the SMA, a sign that it is consolidating. There is indecision in the market. However, the RSI trades above 50, showing bulls have more momentum.
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If bulls remain strong, the price will likely break above the 30-SMA and retest resistance at 0.6500. However, if bears take over at the SMA, the price will look to take out support at 0.6390 and start making lower lows.
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Saqib Iqbal
