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- AUDUSD: Unclear Chinese economy to limit gains fueled by RBA’s restrictive approach – Commerzbank
AUDUSD: Unclear Chinese economy to limit gains fueled by RBA’s restrictive approach – Commerzbank
AUD/USD was able to benefit only briefly from the Reserve Bank of Australia‘s (RBA) rate decision on Tuesday. The surprisingly strong rate hike should support the aussie, but the bleak Chinese economic outlook is set to cap AUD gains, economists at Commerzbank report.
RBA maintains its restrictive course
“The RBA maintains its restrictive course and assumes that the key rate will continue to rise over the coming months. The board will base its decisions on the incoming information as far as the outlook for inflation and the labour market is concerned.”
“Yesterday‘s hike by 50bp to 0.85% might have come as a surprise, but first of all the central bank provided good arguments supporting the step and secondly, it signalled that the timing and size will be guided by the data. As a result, the market so far has no reason to adjust its expectations significantly to the upside and to plan for a much tighter cycle as a result of yesterday’s decision.”
“Principally the RBA’s restrictive approach should support AUD, but as long as the economic development in China remains unclear AUD gains are likely to remain limited.”
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