Jump to content

Market alert: The RBA hikes interest rate to seven-year high


Recommended Posts

The RBA announced another 50 bps rate hike to 2.35% on Tuesday and signalled more hikes to come. What can we expect next?

1662448114427.jpgSource: Bloomberg
 
Hebe Chen | Market Analyst, Melbourne | Publication date: Tuesday 06 September 2022 

What is the key takeaway from September's meeting?

  • Interest rate: the RBA announced another 50 bps rate hike on Tuesday, raising the rate to 2.35%. The central bank has increased rates by a total of 225 bp since May and the board has signalled it will continue to raise rates over the following months.
  • Inflation outlook: The Bank's central forecast is for CPI inflation to be around 7¾ per cent over 2022, a little above four per cent over 2023 and around three percent over 2024. Over time, the Board is “committed” to targeting inflation at the two to three percent range.
  • Economic outlook: the RBA highlighted the outlook for global economic growth has deteriorated due to pressures from high inflation, the tightening of monetary policy, Russia's invasion of Ukraine, and the COVID containment and other policy challenges in China. Locally, the Australian economy is anticipated to grow solidly with a boost from a record level of terms of trade and a strong job market.

 

What to expect next?

Considering the recent hawkish stance of the Federal Reserve, compounded with a higher and longer inflation outlook driven by the elevated energy crisis, the RBA is at a crossroads. While the RBA stays firm on the peak-inflation narrative in the September meeting, the upcoming vital economic data like GDP and CPI print may revise RBA’s prediction for the mid-term.

By today, the cash rate futures markets are implying another three hikes for the rest of the three months in 2022. The peak isn't expected to come until July 2023.

Although the RBA may not fall in line with these hawkish expectations, it's more than likely that Mr Lowe will keep the door open to more rate rises for the next six to twelve months.

1662448114460.JPGSource: ASX

AUD/USD technical analysis

The policy is only part of the story for the AUD as the global economic outlook and the two-decade high greenback push the AUD/USD lower.

The AUD/USD fell below 68 cents this week, however, based on the daily chart, it remains firmly entrenched in a primary downtrend while clinging onto technical support around 0.6789. Overall, the momentum appears skewed to the downside for now, especially in light of the newly formed head-shoulder pattern, which often suggests more selling pressures ahead.

If support around 0.6789 breaks, it may open a further drop for the AUD/USD to 0.6758. The next key level of resistance right now can be found around 0.6856.

AUD/USD daily chart

1662448114469.JPGSource: IG
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,257
    • Total Posts
      90,863
    • Total Members
      41,361
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Trace1010
    Joined 05/02/23 00:32
  • Posts

    • HI,  Please if any IG supporting staff can answer the questions below? 1. in the upcoming AMC/APE vote on 14 March 2023, can shareholder that hold AMC and APE at IG able to make a vote? I also have AMC and APE at IBKR and they did send out a notification to inform me that I can do proxy vote. Will IG do the same? 2. the upcoming vote is to determine APE covert back to AMC then do reverse spilt. Last year after APE issued, IG staff told me that they have to move APE to share dealing account from my ISA account as ISA is not eligible to hold APE (which is completely unbelivable, my APE at AJ Bell and HL are still sitting in ISA account). Anyway, if the conversion and reverse spilt is going to happen, will IG move my APE back to ISA account for the corporate action? Many Thanks
    • The epidemic in recent years has produced profound changes in people's lifestyles, and many of their activities have started to be developed in the virtual world, which plays an important role in promoting the development of the universe of meta. Games, as an important part of the universe of meta, will be the first industry to gain the benefits , but the following conditions are still indispensable for blockchain games to achieve better development.   - Wallets and Exchanges. Through the use of wallets, game users can truly take control of the assets in the game, and exchanges provide a trading platform and liquidity for these game assets NFT, helping users trade and revitalize their game assets. Wallets are a key application for depositing blockchain assets. Currently, wallets such as Metamask are not enough to support the extensive adoption of block games, and wallets will further advance community drive the popularity of blockchain games.  - Game playability. The biggest difference between blockchain games and traditional games is that gamers are also investors. Many blockchain games have gone out of course, treating all users as investors only and forgetting that the essence of making games is to develop high-quality games that users are interested in paying for. If most people play a game just to make money, and no one is ready to pay for it, it becomes a side-scam. The revenue of the participants of the side scam comes from the money of the people who come later, and if there are not enough people who come later, they will not be able to cash in the revenue, leading to the breakdown.  - Speed and performance. A high level of concurrency is the characteristic of game applications, so Wax, Coinan Chain and Polygon, which are public chains with a high level of concurrency and low fees, have attracted a large number of game developers. In the future, with the maturity of technologies such as Ethernet Layer 2 and slice scaling, as well as the maturity of other gaming public chain technologies compatible with EVM, blockchain games will have a better development and operation environment.  - Cross-chain and interaction. Cross-chain and interaction of game assets will be a direction of future development of metaverse games, and blockchain should be connected and accessible like the Internet. The maturity of cross-chain technology in the future will promote the cross-chain transfer of game assets and NFT, and improve the interaction experience of the system                                                                                     The game should maintain the operation of the project by relying on the payment of some users or selling profitable products, just like the new blockchain game Fairy Cat in 2023, which developed diverse gameplay for players and increased the playability of the game, thus got the recognition of many players. Blockchain games need to work hard on game experience and playability. Token economics is essentially just a kind of interest structure , and even good token economics cannot replace the development, operation and profitability of the project itself. It is believed that with the maturity of the above conditions, more and more game developers and investors will enter this industry and together promote the production of some blockchain games with beautiful graphics, first-class experience and high playability.
    • Hello, Is any interest paid on "available" cash (not "margin") in a spread betting account? For example, if I held £10k in an account and had no open positions. The reason for asking is that I understand that proceeds from short sales in a CFD will receive interest (benchmark-2.5%), so was wondering if that applied to all cash, and couldn't find an answer on the web site.   Thanks.
×
×
  • Create New...