AUD/USD: RBA expected to implement consecutive rate increases – BBH
Australian Dollar Gains Strength Amid RBA Policy Expectations
Elias Haddad of Brown Brothers Harriman notes that AUD/USD has climbed past the 0.7100 level, with upward momentum targeting the 0.7150 mark. Recent sentiment figures from Australia have done little to shift market expectations regarding the Reserve Bank of Australia’s (RBA) next moves.
Key Developments:
- The Australian dollar has advanced above 0.7100, approaching resistance near 0.7150 seen in mid-February.
- Recent business and consumer sentiment surveys in Australia have not significantly altered forecasts for RBA rate hikes, although some labor market data points to emerging challenges.
- The NAB business employment conditions index dropped by 2 points to +3 in February, which aligns with a potential increase in unemployment.
- Consumer sentiment regarding unemployment, as measured by the Westpac–MI index, climbed 3.8% to 134.7 in March—surpassing its long-term average and indicating growing concerns about job prospects.
Despite these mixed signals, Haddad suggests that the RBA is likely to proceed with another rate hike at its upcoming meeting on March 17. This view is underpinned by the central bank’s internal models, which point to a positive output gap and mounting capacity pressures.
Market pricing currently assigns a 55% probability to a 25 basis point increase, which would bring the cash rate to 4.10% at the next policy decision.
(This report was generated with assistance from an AI tool and subsequently reviewed by editorial staff.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Dow Jones Industrial Average bounces on Iran's latest Hormuz offer
U.S. stocks opened higher and fluctuated, the Japanese yen rebounded more than 1% intraday, 10-year U.S. Treasury yields broke above 5.22% again, and U.S. crude oil once fell nearly 3%.
After the release of U.S. consumer confidence data, the S&P and Nasdaq turned negative, while the Dow is poised to break a three-day losing streak but is set for a fourth consecutive weekly decline. Meta pulled back, falling more than 3% during the session. The U.S. 10-year Treasury yield surpassed 5.22% again, marking a new high for the third day in a row since 2007, while the 30-year yield reached its highest level since 2004. The yen/dollar pair surged 1.2% intraday, as Japanese and U.S. officials successively signaled concerns over the weak yen. Expectations for a diplomatic resolution between the U.S. and Iran are rising, halting crude oil's two-day climb.
US Treasury volatility surges, triggering alarms! BofA’s Hartnett warns of rising deleveraging risks as higher yields become main threat to the market
Bank of America strategist Michael Hartnett warns that the recent sharp rise in volatility in the US bond market is increasing the risk of broader deleveraging in financial markets.
U.S. diesel prices surge 83% this year! Apollo Chief Economist warns: Cost pass-through may make core inflation more stubborn, Federal Reserve can't ignore it
Torsten Slok, Chief Economist at Apollo Global Management, has warned that the inflation threat posed by the surge in U.S. diesel prices to historic highs may be more serious than the Federal Reserve currently realizes.
Crypto prices
More
