AUDJPY sold off ahead of the 90 levels on Friday and will head for an RBA rate hike decision on Monday.
AUDJPY – Daily Chart
The AUD/JPY exchange rate has been rallying after a two-week decline from the trendline break. The RBA decision should decide the following path for the forex pair.
The Reserve Bank of Australia was expected to start cutting its key benchmark rate in the middle of this year. That has now been pushed out further to February 2024. The minutes of the last RBA board meeting said that the central bank will ‘reconsider the case for a pause’ at this month’s meeting.
Central banks have recently taken their foot off the pedal with rate hikes after the banking turmoil in the US and Europe. However, that did not extend to Australia, and the RBA may have different ideas.
RBA Contemplates Options
Inflation has been a problem for the Australian central bank, and they raised rates to 3.6% last month, the highest in more than ten years. One more rate hike had been expected in the current tightening cycle, but that may come next month. The Australian Financial Review surveyed 36 economists, putting the first post-pandemic rate cut in play by February 2024. A quarter of economists believe it may come earlier.
Annual inflation has slowed to 6.8 percent in February, leading analysts to expect the bank to seek to alleviate pressure on the housing market. Governor Philip Lowe has stated that the bank’s monetary policy is now in “restrictive territory” and may prompt for a pause this month.
Futures markets highlight a 91 percent chance of holding the cash rate at 3.6 percent on Tuesday. That is key for traders with an opportunity for a hike to boost the Aussie dollar.
