The RBA Expects More Rate Hikes - Philp Lowe

The RBA Expects More Rate Hikes - Philp Lowe

2022-09-08 • Updated

"When I spoke at the Anika Foundation event last year, CPI inflation in Australia had been below 2 percent for a number of years and, in underlying terms, was just 1.6 percent. Today, CPI inflation has risen to 6.1 percent, and underlying inflation is 4.9 percent. These are the highest rates in many years." - Lowe.

Speaking at the Anika Foundation Fundraiser in Sydney, the governor of the Reserve Bank of Australia revealed that the current discrepancies between the annual inflation forecasts and the actual values have caught everyone by surprise. Last year, the RBA forecasted 2022 inflation rates to be just 1.75%, whereas so far this year, there are reasons to expect 7.75% CPI inflation rates - a big forecast miss! To counteract this, Mr. Lowe has established the need for the RBA to continue hiking interest rates in hopes of reaching the flexible inflation rate targets. He made it clear, however, that the pace of hikes would be much slower.


As we expect continued hikes in interest rates from the RBA and forecasted increases in unemployment rates by the national statistical office of Canada (to be released Friday, 09th September), fundamental factors seem to support a bullish correction on AUDCAD. Technically speaking, the market is trading close to the Daily Support at 0.87922 and has retested a major trendline from 2020.



The Daily Support zone between 1.11008 and 1.10750 is already within reach of the current price action on AUDNZD, and offers the Moving Average 50 and a major trendline as a confluence(img.02)



The major trendline aside, price is also trading between the daily support zone at 0.67399 & 0.66633, thus increasing the chances of a bullish correction, possibly back to the 50-MA or even higher.



TRADE IDEA: What's Next for Yen Crosses?
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The views here are solely based on Technical Analysis techniques using my personal Smart Money approach. Hence, it is important to understand that the trading of CFDs comes at a risk; if not properly managed, you may lose all of your trading capital. To avoid costly mistakes while you look to trade these opportunities, be sure to do your own due diligence and manage your risk appropriately.


As I earlier indicated in my article this week, I am expecting an upward push from the Dollar as a reaction from the Demand zone I have marked out. The PPI release earlier moved prices a bit but lacked sufficient momentum to cause a significant break of structure - and thus, no change of trend.

TRADE IDEA: Major Currency Pairs to Watch Out For This Week
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It is general knowledge that the Major currency pairs are pairs that have the US Dollar as either the base or quote currency. As a result, our trade ideas for major pairs will begin first with an analytical review of the US Dollar chart.

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For those who may be unfamiliar with Price Action trading, the horizontal arrows represent areas where the market structure was broken. As you can see in the scenario above, price broke below the previous low at the two marked instances

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Let's start off with a look at the Daily timeframe on Bitcoin. We currently see price reacting to the rally-base-rally demand zone between the 15,600 - 14,300 price area. Price also seems to have found support off the trendline support as marked in the image above. Interestingly, this means the overall bias on BTCUSD is Bullish.

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Central Bank Digital Currencies (CBDCs) are virtual national money. The idea of ​​creating such currencies came to the authorities after the success of cryptocurrencies, which also exist only in digital form.

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