Expectations for the time when interest rates might increase at the Reserve Bank of Australia (RBA) are believed to have implications for the Australian dollar. Analysts delivered their foreign exchange market perspective and remarked that Australia’s national currency could get some advantages.
We find this report relevant to share, especially to our readers and traders from Australia. This latest news can help them understand how they can navigate today’s foreign exchange markets and derive benefits.
Based on the news posted online by Pound Sterling Live, a website delivering the latest news about the British Pound, forecasts, and conversions, the Australian dollar has the likelihood to get upside support if the RBA brings its anticipated timing of an interest rate rise forward.
At this time, the Australian dollar has been bid higher on increasing commodity costs and a general pro-risk sentiment among international investors. Nevertheless, a missing leg of support for Australia’s legal tender is reportedly the dovish policy stance of the RBA, which largely rests on the perspective that the labor market must recuperate further before interest rates get raised.
The Australian dollar might obtain more support if the RBA responds to a better labor market and launch a more hawkish tone, indicating that the time for interest rate rises might be looming. Views about the Australian dollar’s status come as the ANZ released its research explaining how they believe the RBA underestimates the scale of the economic rebound that awaits Australia.
The Australian lender believes that their view could have supportive implications for the national currency if it is correct. ANZ particularly remarked that a rapid decline in unemployment would possibly challenge the RBA’s standpoint on the outlook for the labor market.
The RBA has indicated that interest rates would not surge until it has pushed wage growth back up and unemployment down to where it believes they should be. In its policy statement for May, the RBA relayed that wages growth and inflation are anticipated to stay low, picking up but merely gradually, despite the more robust outlook for output and the labor market. The present RBA labor market projections leave them communicating that a rate hike in the country is not possible until 2024 at the earliest.
We find the ANZ and the RBA not on the same page at this point. However, we think it would help the country if they coordinate with each other regarding how the Australian dollar can remain strong amid the coronavirus pandemic.
In this manner, the Australian citizens can stay guided regarding the forex markets and their national currency. They can also stay prepared against potential adverse events affecting the foreign exchange market and the Australian dollar.