The Australian economy is stronger than before, but the Australian Dollar is testing tides against the national resistance level. Fundamentals have held their ground as the Australian Dollar is backed by two factors.
A healthy national balance sheet and the elevated commodity prices have, as of now, got the back of the prevailing economic conditions. They are not alone, and there is a third surprise element as well.
RBA To Soon Take A Call
With trade terms at an all-time high, the domestic economy is getting a kick already in the market. The national currency has been well below the average since 1983 in the long term, but with a strong domestic economy, the market is floating pretty smoothly.
A quick recap, the Australian Dollar continues to be backed by the prices of commodities and a healthier national balance sheet.
Sources actively engaging in trades say that the Australian Dollar could soon get a kick from the Reserve Bank of Australia – RBA. The Central Bank has played a crucial role in maintaining the economy and wealth of the nation for a long time.
It started with the RBA mandating an inflation targeting regime in 1993. Post that phase, and the country has prospered to only look forward to a greener side.
Political parties have been staking claims to take the credit for the rosy outcome; however, the RBA remains unmoved by the trend that it started to save the national economy.
The Australian Dollar relates to when and how much the RBA hikes the rate. This call is normally taken to control inflation and is dependent on the CPI figures. The RBA is likely to wait for the conclusion of the federal election before raising the rates.
Based on the trend, the RBA is also likely to hike the rates if CPI figures don’t paint a supportive picture. May 3rd has been coined as a challenging day for the Central Bank, a situation that it has faced before.
Based on the Australian CPI statistics published on April 27th, the RBA may shoot up the rate. It will keep an eye on the federal elections that are scheduled to happen before May 21st.
With the national economy a priority, the RBA is also likely to repeat the actions of 2007. That was the period when the RBA did not hesitate to hike the rate just before an election. Some of the top Australian forex brokers are expecting the situation to re-occur in 2022.
If not May, then June is a sure-shot month when the RBA will meet to discuss the hike in the rate. Sources close to the RBA say that even though June carries a surety with it, the May meeting of the Central Bank is still very much alive to a call.
The US report has compounded the issue for Australia. Experts believe the argument that was centered around cost-push inflation being transitory has turned out to be wrong.