RBA puts an end to tightening, AUDUSD falls
The Australian dollar falls as consumers slow down, supporting the need for a rate freeze. Data show that households are feeling the pinch of tighter monetary policy with February’s retail sales falling well short of expectations. Further moderation in consumer spending is expected as the full effect of higher interest rates will be felt over the next few weeks. This would allow the RBA justification to halt rate increases. Uncertainty in global financial markets could also be a factor that might prompt the central bank not to raise rates at its April meeting. The nearest support is at 0.6500, which is a new resistance.
NZDUSD is a step ahead of RBNZ
The New Zealand dollar continues to consolidate ahead of the RBNZ policy outlook. Inflation expectations for the short term remain high at 5.5%, which is also higher than the RBNZ standard. As inflation continues to rise at a rate that is nearly three decades high, and well above the target of 2%, it will take some time for restrictive interest rate policies to make their mark on the system. It is not clear whether policymakers have the patience to endure this. The central bank will have to provide concrete evidence that there is a downward trend in consumer prices.
