The market’s focus is on whether Australia’s central bank takes a different path from others by raising interest rates.
Stubbornly high core inflation last quarter has markets pricing about a 60% chance the Reserve Bank of Australia raises its benchmark cash rate to a 12-year high of 4.35%. The US Federal Reserve left interest rates on hold last week and a benign jobs report on Friday reinforced wagers that there may not be any more US hikes in this cycle.
“We’ll need another few weeks of data to know the direction we’re heading,” said Ben Bennett, APAC investment strategist for Legal and General Investment Management. “In the meantime, equity markets could be whipsawed by the economic noise.”In foreign exchange markets the slightly stronger dollar pushed the Japanese yen back to the weak side of 150 to the dollar, and it hovered at 150.1 in the Asia morning.