AUD/USD dives as RBA’s statement not restrictive enough for the market – Commerzbank
07.03.2023, 08:32

AUD/USD dives as RBA’s statement not restrictive enough for the market – Commerzbank

AUD is lower after RBA’s rate decision. However, Antje Praefcke, FX Analyst at Commerzbank, warrants caution about pricing an end to hiking cycling in Australia anytime soon.

Market must focus on price and economic data for the time being

“In principle, the RBA continues to sound hawkish. It raised the key interest rate by 25 bps to 3.60% and expects that the key rate will have to be raised further. In short, the interest rate cycle is not over yet, with the RBA making further action data dependent.”

“But if the RBA's statement was restrictive, why did the AUD weaken as a result of the rate decision? The statement was seemingly not restrictive enough for the market, which is why it sold the AUD in an initial reaction. However, I would be cautious to bet on an end to the interest rate cycle in Australia anytime soon.” 

“Similar to other countries, while headline inflation is falling due to falling energy prices and base effects, upward pressure remains in many other areas, especially services and wages. As the RBA makes its further course of action data dependent, the market must and will continue to focus on price and economic data for the time being.”

 

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