Michele Bullock, the Governor of the Reserve Bank of Australia (RBA), delivered a speech today. Let’s summarize the key points and assess whether her stance was hawkish or dovish:
Inflation Challenge:
- Bullock emphasized that inflation remains a crucial challenge over the next one to two years.
- Taming consumer prices remains a priority for policymakers.
Homegrown Inflation:
- She highlighted that the remaining inflation challenge is increasingly homegrown and demand-driven.
- This implies that inflation results from aggregate demand exceeding the economy’s potential to meet that demand.
- Such inflation requires a more substantial monetary policy response.
Balancing Act:
Bullock seeks to tread a narrow path:
- Bringing inflation back to the RBA’s target range of 2%-3%.
- Keeping as many people as possible employed6.
In summary, Bullock’s speech leans dovish. While acknowledging the inflation challenge, she emphasizes the need for a cautious approach, considering both economic activity and employment. Her focus on homegrown inflation suggests a commitment to supporting economic growth However, market reactions may further shape the interpretation of her stance.
Source:
AUD/USD Smart Money Overview:
According to the Daily View, the price is following a bearish structure. It touches on an extreme daily POI then moves bearish targeting 0.6400.
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AUDUSD Technical Outlook:
The AUD/USD is currently experiencing a decline from 0.6666, with the intraday bias remaining on the downside towards the support level of 0.6476. A breakthrough at that level would suggest that the decline from 0.6870 is set to continue towards the low of 0.6442. On the upside, a break of the minor resistance at 0.6583 would initially shift the intraday bias to neutral. However, the downside risk persists as long as the resistance at 0.6666 holds.
