Australia's inflation rose again, fueled by rising fuel prices and the housing market. However, AUD/USD is shrouded in uncertainty ahead of the Fed's announcement.
On Tuesday (25/January), the Australian Bureau of Statistics released data on Consumer Inflation which recovered from 3.0 percent to 3.5 percent on an annual basis in the fourth quarter of 2021. This figure managed to exceed expectations of a 3.2 percent increase.
On a quarterly basis (Quarter-over-Quarter), Australian inflation also strengthened from 0.8 percent to 1.3 percent. This figure successfully surpassed expectations of an increase which was set at the level of 1.0 percent.
The significant increase in Australian CPI data was triggered by the increase in global fuel prices. In addition, soaring housing prices also contributed to price pressures. Analysts see the surge in Australian CPI to be a surprise for the Australian central bank (RBA). The reason is, RBA policymakers say that inflation will not reach 2.5 percent until the end of 2023, so there is no reason for them to raise interest rates this year.
With the release of Consumer Inflation data which turned out to be higher than projected, the market's attention is now focused on the next RBA meeting, to find out the reaction of policy makers at the central bank in responding to a spike in inflation that exceeds their outlook.
"We expect the RBA to soon announce the termination of the asset-buying scheme at its meeting next week (01/Feb)," said Ben Udy, economist at Capital Economics. He also predicts that workers' wage growth will pick up in the next few months so that the RBA has the potential to raise interest rates in November.
Anticipate Fed Announcement, AUD/USD Under Pressure
Broadly speaking, the Australian CPI data this morning was very impressive because it pushed the RBA's hawkish outlook. However, the Australian Dollar only strengthened momentarily against the Greenback after the report's release. When this news was published, the AUD/USD pair had slumped and was moving in the range of 0.7150.
AUD/USD's hesitation to move up is related to market participants' anticipation of the Fed's monetary policy announcement. Most market participants expect the Fed to announce a more aggressive rate hike policy after this week's FOMC meeting.
Post a Comment for "Australian inflation rebounds, AUD/USD is under pressure "