AUD and NZD Stronger As Banking Fears and Inflation Ease

Must Read

The Australian and New Zealand dollars edged higher on the last day of March, as experts believe this was due to the easing tension caused by the bank crisis and rising inflation. The currencies look promising as the reserve banks consider pausing rate hikes.

The AUD edged at US$0.67 while the NZD at US$0.62, both firmer at around 1 per cent, just before March ended. Many experts believe that the more decisive edge was brought about by easing tensions as no fresh bank doubts emerged overnight. Conditions have calmed through the week as the tumult of the last fortnight recedes, and investors look to stabilise positions.”

In anticipation of the Reserve Bank of Australia (RBA) meeting on 4 April, many economists and investors expect the bank to pause its rate hikes after ten consecutive meetings. RBA governor Philip Lowe states, a pause at the April meeting is a possibility and employment, inflation and consumer spending data would play a key factor in the RBA’s decision.”

The governor added that consumer spending and inflation eased in February, and the fears over the banking crisis have already subsided. Market prices have also paused at 87 per cent, but the four major Australian banks have mixed predictions on the anticipated RBA meeting.

ANZ and NAB expect a hike next week, while Westpac and CBA anticipate a pause. CBA head of Australian economics Gareth Aird predicts that the RBA will move towards a ‘hawkish pause’ and would allow a hike in May should data show strength.

But according to Prashant Newnaha, TD Securities’ senior rates strategist, a sharp slowdown in inflation last February may be perceived as that consumer prices would undershoot the RBA forecast, allowing for an extended pause.

However, Newnahan also noted that if their prediction is wrong, it may be fair to expect the RBA to hike 25 bps in April instead of a pause.

- Advertisement -spot_img
Latest News
- Advertisement -spot_img

More Articles Like This

- Advertisement -spot_img