RBA Rate Hike Possible as AUD Appreciates Significantly Since Mid-January

RBA Rate Hike Possible as AUD Appreciates Significantly Since Mid-January

The Australian dollar came under pressure today morning after Australia recorded weak retail data. This is expected to reflect concerns regarding the rate decision, according to Commerzbank. Several players in the market anticipate the RBA to keep its interest rate on hold at 2% as the Australian economy continued to modestly expand in Q1 2016, while labor market rebound continues, added Commerzbank.

Furthermore, in Q4 2015, inflation accelerated to 1.7%, suggesting that it is just little lower than the central bank’s target range of 2-3%.  However, there is a possibility of another reduction in rate as the AUD has gained significantly since mid-January, noted Commerzbank. AUD appreciated just under 8% in trade-weighted terms, rising around 12% against the USD alone.

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