Dollar price shoots up, RBA’s interest rate unchanged

Dollar price shoots up, RBA’s interest rate unchanged

The dollar price rose in Asia on Tuesday morning. However, it didn’t peak as much as recent highs as the RBA (Reserve Bank of Australia) led vital central banks in announcing their policy decisions. 

The US Dollar Index hiked to 93.918 by 0.04 per cent at 3:50 AM GMT (11:50 PM ET). 

The USD/JPY pair slipped to 113.92 by 0.05 per cent. 

The AUD/USD pair edged up to 6.4005 by 0.05 per cent while the GBP/USD pair inched down to 1.3651 by 0.16 per cent. 

Meanwhile, RBA did not make any changes in its November interest rate. It remained at 0.10 per cent as it announced the policy decision in the day, later. 

Notably, the central bank failed in defending its yield targets as bonds were sold during the recent sessions. Moreover. The New Zealand’s Reserve Bank may track moves of Antipodean counterpart in its upcoming policy decision. 

Meanwhile, other central banks can pick hints from the decision by the RBA, with Bank of England and the US Federal Reserve announcing policy decisions on Thursday and Wednesday respectively. However, there’s a lot of dilemma during the rising inflation.

Steve Enlander, head of G10 FX Standard Chartered said that underlying inflation was more than what underlying inflation anticipated by the Fed. He said that Fed must act decisively when inflation is not going towards aimed levels after asset tapering ends. However, inflation may fall once supply constraints will ease. 

Notably, bets on higher rates are indicated by trader positioning, as traders have congregated to short the yen.

Kit Juckes, Societe Generale strategist said that it was a bet that interest rates would continue moving against the yen, likewise they surge somewhere else, especially in the US. 

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