Ultima Markets[Market Hotspot] Market Entanglement: Federal Reserve of Australia Policy Tighten again...

The Federal Reserve of Australia will announce its latest monetary policy on Tuesday. From the overall inflation data in Australia, it can be seen that the Australian Federal Reserve's policy tightening action is about to enter its final stage. however8The market is still divided on whether to raise interest rates this month, so the direction of the Federal Reserve's monetary policy this week will dominate the trend of the Australian dollar against the US dollar.

The Dilemma of Australian Residents

Australia Q2CPIThe data has finally fallen, reducing the possibility of the Federal Reserve raising interest rates significantly.2023In the second quarter of this year, Australia's inflation rate decreased year-on-year to6.0%, lower than the previous quarter's7.0%Below market forecast6.2%. This is from2022The lowest figure since the third quarter of this year is mainly driven by the slowdown in commodity prices.

Australian Inflation Blue LinevsRBA interest rate black line)

However, it is worth noting that the inflation rate of the service industry in overall prices has accelerated to6.3%, for2001The highest level since the introduction of this data in. This surge is driven by rising prices in various service categories, including the complaints of rent among Australian residents.

As I shared earlier《Voice of Australian speculators: Fortunately, it has been temporarily suspended》As said,2022year1Monthly3.23%The mortgage interest rate has now risen to6.55%, with an increase of up to102.7%. Calculate a simple math problem,2022If monthly interest is paid back at the beginning of the year2000The Australian dollar is currently as high as4054AUD.

This is the current dilemma facing Australia,The endless cycle of interest rate hikes and rent spirals. The Federal Reserve of Australia has raised interest rates, resulting in an increase in mortgage payments for landlords. Landlords have shifted costs to tenants in order to reduce their burden, leading to an increase in rent and indirectly affecting inflation data.

Monetary policy has come to an end, but it has not yet reached the end

Nevertheless, the current inflation distance2%The target still has a distance. Therefore, it is still too early for the Federal Reserve of Australia's monetary policy to stop.

If the policy interest rate is below8There has been no change in the month, and the AUD/USD may fall below the current volatile range and further decline. On the contrary, a higher than expected interest rate hike may drive the Australian dollar back towards appreciation against the US dollar.

The market is currently expecting an interest rate hike25A basis point will ensure that the tight labor market does not push up wage levels, while price increases hover at twice the central bank's target level.

Daily chart of AUD/USD, sourceUltima Markets MT4）

The daily cycle of the Australian dollar against the US dollar has performed poorly in the past two weeks, and the decline in technical terms is close to the proportional height of the previous period. The interest rate decision of the Federal Reserve of Australia will determine whether the AUD/USD will stop a decline and reverse or start a further bearish trend near this level.

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