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- AUD/USD to remain below 0.73 level as RBA to stay on hold until May – ING
AUD/USD to remain below 0.73 level as RBA to stay on hold until May – ING
The Reserve Bank of Australia (RBA) left its policy rate unchanged at 0.1% as expected and the bank reiterated that the policy rate will not be increased until actual inflation is sustainably within the 2%-3% target range. Subsequently, economists at ING expect the AUD/USD pair to be capped at the 0.7300 level.
RBA freezes the policy discussion until May
“The RBA defied any expectations that it is moving towards a more hawkish stance. The focus has remained on wage growth which ‘remains modest’, adding that ‘it is likely to be some time yet before growth in labour costs is at a rate consistent with inflation being sustainably at target’. This virtually freezes the policy discussion until mid-May, which may put a cap on AUD gains compared to peers that can count on ongoing central bank tightening cycles.”
“Australia’s growth figures for 4Q tomorrow are expected to show a 3.5% quarter-on-quarter bounce, but should have a limited impact on AUD given the RBA’s focus on wage dynamics.”
“AUD/USD may climb to the 0.7300 mark today on the back of relatively upbeat risk environment, but even though it is less exposed to the Ukrainian conflict than European currencies, its high beta to global sentiment continues to pose downside risks in the short-term.”
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