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The Australian dollar did not stage any big moves after the release of the Reserve Bank of Australia Meeting Minutes from the Australian central bank failed to throw up any new surprises.
Over the last few days the AUDUSD pair had been posting solid gains on the expectations that the Fed would not be acting as aggressively as expected and the US economy was not as bad as feared after the recent retail sales and US jobs reports.
The RBA Meeting Minutes from the previous Reserve Bank of Australia meeting revealed that the central bank remained committed to reducing domestic inflation.
The Minutes revealed that “Members agreed that further steps would need to be taken to normalise monetary conditions in Australia over the months ahead.”
And that RBA “Members noted that gauging the level of the neutral rate is challenging in practice because it cannot be directly observed and they “considered the possibility of raising interest rates by 25 basis points or 50 basis points.”
Longer-term measures of inflation expectations were well anchored, and neutral rate framework indicates that if inflation expectations rise, level of nominal interest rates required to return inflation to the target will be higher than otherwise.
The Minutes showed that Inflation is forecast to peak later in 2022 and then decline back towards the 2 to 3 per cent range in 2023, while higher interest rates will also help establish a more sustainable balance between the demand for and the supply of goods and services
Earlier today Consumer Confidence data show a marginal 0.2 increase. Today’s Consumer Confidence number came in at 81.4. For the record the prior number was 81.6.
ANZ Bank noted that confidence “Steadied as concerns about the economic outlook ebbed, likely driven by the strong labour market print” and “High inflation and rising interest rates are feeding into households’ weak assessment of financial conditions”.
In terms of market moving data it is all about the United Kingdom jobs situation during the European session as we see employment and unemployment data.
Mostly, traders are focused on the UK political situation as the race for Boris Johnson’s replacement starts to heat up. Rishi Sunak is looking like an early favourite.
It is worth noting for Pound and FTSE100 traders that Governor of the Bank of England Andrew Bailey and Britain’s finance minister, Nadhim Zahawi speak at Mansion House Financial and Professional Services Dinner.
