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On August 26th, ING strategists Padhraic Garvey and Michiel Tukker stated that market discussions surrounding the U.S. Treasurys decision to double the size of its long-term Treasury repurchase program continue to intensify, but with the Jackson Hole Economic Symposium approaching, market focus will gradually shift to short-term bonds. In a report, the two strategists noted, "Treasury Secretary Bessenter continues to dominate, or rather attempts to dominate, the long-term bond market, while Federal Reserve Chairman Warsh may also want to play a similar role in the short-term bond market, although he is currently choosing to remain low-key." The strategists indicated that Warsh will have the opportunity to further elaborate on his views at the Jackson Hole symposium on Friday.On August 26, 2026, Wang Yi, member of the Political Bureau of the CPC Central Committee and Foreign Minister, met with Uzbekistans Chief of Staff, Mirziyoyeva, in Beijing. Wang Yi stated that China has always been a trustworthy and reliable partner of Uzbekistan, and will, as always, support Uzbekistan in safeguarding its national sovereignty, security, and development interests, in pursuing a development path suited to its national conditions, and in President Mirziyoyevas policies and initiatives to build a "New Uzbekistan." He expressed confidence that Uzbekistan will continue to provide firm support on issues concerning Chinas core interests. China is willing to work with Uzbekistan, guided by the important consensus reached by the two heads of state, to strengthen high-level exchanges, accelerate the construction of landmark projects such as the China-Kyrgyzstan-Uzbekistan railway, promote mutually beneficial cooperation in trade and investment, energy and minerals, culture and people-to-people exchanges, and local cooperation, expand cooperation in emerging fields such as artificial intelligence and renewable energy, and strengthen multilateral coordination to write a new chapter in China-Uzbekistan friendly cooperation.The UK energy regulator OFGEM says the abolition of VAT will benefit customers currently on flat-rate packages, as suppliers will automatically apply discounts.The UKs energy regulator OFGEM announced that from October, the price cap will increase by £60 per year (or £5 per month) to £1,723 for households using both electricity and gas.The UKs energy regulator OFGEM has stated in this update that the governments decision to abolish VAT on all household electricity bills has been reflected in the decision.

The Australian Dollar's Future Could Be Revived by the RBA. Is it Better to Hike or Not to Hike?

Drake Hampton

Apr 02, 2022 09:48

Tips

  • On the back of robust commodities, the Australian dollar is testing previous highs.

  • The RBA may be on track for a May rate hike if CPI surprises to the upside.

  • Central banks intervene when transient inflation becomes entrenched.

 

The Australian Dollar has been bumping up against resistance levels, despite the fact that the Australian economy's basic fundamentals remain robust.

 

The currency is supported by a backdrop of rising commodity prices and a relatively solid national balance sheet.

 

By historical measures, the Australian dollar has depreciated since the float in 1983, while the terms of trade have remained multigenerational highs. This has a beneficial effect on the home economy.

 

Australia has enjoyed extraordinary prosperity since the RBA was authorized with an inflation targeting framework in 1993. While political parties of all stripes would like to claim credit for the positive outcome, the reality is that the central bank's prudent management has been critical in preserving the nation's riches and economic health.

 

The RBA is expected to encounter a hurdle at its May 3rd monetary policy meeting, but it is one they have faced previously. Australian CPI data will be released on April 27th, and all indicators are that it will likely shoot the lights out. Prior to May 21st, a federal election will be place.

 

The market is pricing in a slim possibility of a May hike but a significant probability of the first rate hike in June. The RBA said following its February meeting that it will wait until the first-quarter CPI statistic is released before making a rate decision.

 

The market appears to believe the RBA will postpone its decision until after the election. They increased rates right before an election in 2007. If the CPI rises above a certain level, history shows they will act.

 

Complicating matters is the US Federal Reserve's egregious policy blunder. The argument that inflation caused by 'cost push' is 'transitory' has been disproved.

 

The RBA has the track record and playbook to contain inflation before it reaches 'eye watering' levels. May's meeting could very well be 'live' for a CPI-dependent rate hike.

 

With a more hawkish RBA, the Australian dollar might trade above long-term norms.

 

Since The 1983 Float, The AUD/USD Has Regressed.

 

AUD/USD Regression Since The Float In 1983

 

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