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Nov 16 - 01:55 AM

AUD/USD - COMMENT-AUD/USD Rises As Market Defies The RBA's Rate Message

By John Noonan  —  Nov 15 - 10:22 PM

The Australian dollar is rising despite a spirited push-back by Reserve Bank Governor Philip Lowe on the prospects of a cash rate rise in 2022, as the market is pricing.

Lowe said on Tuesday the bank's latest forecasts do not warrant a rate hike in 2022 and emphasized that inflation would need to see stay within the RBA's 2-3% target band for a sustained period before they would take actionnS9N2QH014.

Refinitiv's RBAWATCHsuggests the market strongly disagrees, with a 25-basis-point rate hike priced by around mid-2022 and at least two more by the end of next year.

The AUD/USD started to rise earlier on Tuesday following the release of the RBA's Nov 2 meeting minutes, which conveyed less confidence in the central bank's inflation and rate outlook.

The central forecast is for the cash rate to remain on hold until 2024, but the minutes said "as the risks to the inflation forecast had shifted higher, it had become possible that an earlier increase in the cash rate would be appropriate" nL1N2S701D.

The AUD/USD has traded as high as 0.7368, near the 10-day moving average at 0.7371.
A close above 0.7375 targets the 21-DMA at 0.7436.

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Source:
Refinitiv IFR Research/Market Commentary

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