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RBA follows the script

As expected, the Reserve Bank of Australia lifted their base rate by 25 basis points to 3.6% when they met earlier today. That’s the 10th consecutive rate hike and it brings the base rate back up to 2012 levels. Also as expected, their statement was a little less gung-ho than previously. This new dovish tone excluded reference to further interest rate hikes but did talk of further tightening of monetary policy. That’s a niche nuance but it was picked up on by the markets. As a result, the Australian dollar weakened. It should be noted that we had some very poor import and export data from China overnight and, such is the importance of an export market for Australia, this data won’t have helped AUD. The GBPAUD rate is back up to AUD 1.7960 but could well move through AUD 1.80 and the AUDUSD rate is ¾ of a cent lower on the week at USD 0.6700. The Governor of the RBA will speak again this evening, so that’s one to watch.

Sterling steady after encouraging data

The British Retail Consortium posted a strong survey result for February. Sales were 4.9% up on the year. Also, Halifax posted 1.1% worth of house price rises in February. That should be encouraging but politics is still the pound’s bete noire. The fact that Sterling failed to rally on these good data stories suggests it is vulnerable to further losses. The big ticket item for this week is the UK economic growth data, due on Friday. Growth of any sort in January would be encouraging. That data will be accompanied by manufacturing and industrial production number. So, the pound may trade a little sideways until then. Right now, the GBPUSD rate is $1.2030 and the GBPEUR rate is edging higher at €1.1275.

USD paused ahead of Fed Chair’s testimony

The Chairman of the US Federal Reserve, Jerome Powell will testify this afternoon on the economic outlook and the Fed’s monetary policy stance before the Joint Economic Committee, in Washington DC. Everyone wants to know how many and how big will the Fed’s rate hikes be and when will they end. It is unlikely the message will be as clear-cut as that. Central bankers have a set of jargon all of their own but, if we can decipher Mr Powell’s verbiage, it will set the path for the USD for the rest of the week. Friday’s employment report will take over from there. As mentioned above, the GBPUSD rate is $1.2030 and the EURUSD rate is pretty calm at $1.0670.

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