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On September 17th, when asked whether it was reasonable for the market to price in nearly four interest rate hikes within the next year, Bank of England Governor Bailey said on Thursday that the outlook was too unpredictable, adding that his officials had not yet discussed this. "Weve had a lot of discussions this time, but we havent discussed the prospect of four rate hikes," Bailey told the media after the Bank of England kept interest rates unchanged but warned of rising inflationary pressures. He added, "The market has to form its own judgment, but I must point out: the current situation... is simply too unpredictable." Bailey stated that the state of the UK gilt market—with the 30-year gilt yield hitting its highest level since 1998 this week—did not influence the banks announcement. Bailey said, "We planned this work long before the Middle East conflict, so this is not at all a reaction to market conditions."The U.S. pending home sales index fell 4.9% year-over-year in August, compared with a forecast of -3.9% and a previous reading of -2.50%.The U.S. pending home sales index rose 0.3% month-over-month in August, compared with expectations of -0.6% and a revised previous reading of -2.6% (from -2.30%).The U.S. pending home sales index for August was 71.2, revised from 71.2 in the previous month.Israels Permanent Representative to the United Nations: Our message to the Syrian government is very clear: if you wish to reintegrate into the international community, you must ensure that Syria is not used as a platform for terrorist activities or an arena for foreign powers to vie for power.

AUD/USD falls to approximately 0.67 as a result of less hawkish RBA minutes

Daniel Rogers

Mar 21, 2023 14:05

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As a result of the publication of minutes from the Reserve Bank of Australia (RBA) that were less hawkish, the AUD/USD pair has declined to near 0.6705. Given that inflation was still too high, the labor market was constrained, and business surveys indicated robust activity, the Board reaffirmed that additional policy tightening would likely be required. The RBA policymakers viewed a 25 basis point (bps) rate increase as the only viable option for March's monetary policy.

 

Investors should be aware that RBA Governor Philip Lowe raised the Official Cash Rate by 25 basis points to 3.60 percent for the fifth consecutive time. In addition, it was the RBA's eleventh consecutive increase in interest rates to combat persistent inflation.

 

Recent optimistic Australian employment data indicate that the fight against persistent inflation is extremely complicated and that RBA policymakers are still required to make challenging decisions in times of inflation uncertainty and global banking collapse concerns.

 

In the Asian session, S&P500 futures have extended Monday's gains as investors disregard concerns over the Federal Reserve's (Fed) impending monetary policy, indicating a further improvement in market participants' risk appetite.

 

The US Dollar Index (DXY) has remained relatively stable around 103.30 as investors anticipate a less hawkish monetary policy and interest rate guidance. Fed Chair Jerome Powell is required to restore investor confidence following the failure of three midsize commercial banks in the United States. This could be accomplished through minor adjustments to interest rate policy.

 

In the interim, the demand for U.S. government bonds has weakened further as inflation expectations have risen as a result of the collaborative effort of various central banks to support commercial banks by providing liquidity assistance in the form of US dollars. This has led to higher yields on US Treasury bonds. The yield on the 10-year Treasury note has risen to 3.5%.


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