The Australian Dollar stays captive to global forces as the USD continues to soar on the back of an inflation-combating Federal Reserve. In the early hours of today, St. Louis Fed President James Bullard emphasized the bank’s determination to push price pressure down when he said, “There’s a lot of tightening in the pipeline.”
His comments were backed by Evans and Kashkari, his fellow board members. These comments have caused the treasury yields to soar to levels not seen in years.
The USD shot up across the board and no more so than against the British Pound after the UK government announced some unexpected fiscal stimulus measures last Friday.
The RBA has hinted toward a deceleration in their rate hike program. Governor Philip Lowe said that the board would consider a 25 or 50 basis point lift at their meeting.
This shows a serious inflation problem but has also undermined the currency with a lower yield on offer.
The next CPI gauge will be known 26th of October and makes this upcoming meeting at Martin Place a somewhat blind estimate of what is happening to price pressures within the economy.
The market is also torn between a 25 or 50 basis rate hike next week, with the futures market pricing in a 39 basis point change.