Holidays are a serious thing at Martin Place, with the Reserve Bank of Australia having its last meeting on 6th December 2022 but won’t re-convene until the 7th of February in 2023, thereby letting through three US monthly CPI/inflation prints plus a whole lot of global macro events to absorb.
This leaves Australian dollar traders in a pickle as other central banks continue their regular monthly schedule amid a confused inflationary picture in the US and Europe.
The Pacific Peso has been gaining traction since the mid-October “softening” of the Fed, finding support at the 62 cent level versus USD to then push up to the 66-69 cent band:
But it’s all about context, with this recent rally on the back of steep falls throughout 2022:
Most economists have the Aussie getting back to the 70 cent level in 2023, according to a recent survey in the AFR, or even higher towards the 74-75 cent range, banking on US inflation peaking.
But don’t confuse the usual 2-4 cents of intramonth price volatility in the AUD/USD for a new trend, like some so-called market economists so often do…