On Wednesday, the Australian dollar posted modest gains. The AUD/USD trades at 0.6865 in North American trade. This is up 0.16%. The Fed rate announcement and November’s Australian employment report will both have an impact on the direction of the pair. We can expect a stronger move from the pair today.
Australian employment to slow
Australia’s labour market has remained resilient, a key factor in the Reserve Bank of Australia being able to deliver steep rate hikes in the tough battle to contain inflation. The November release is expected to show 15,000 new jobs, a decrease of 32,000 in a month. The unemployment rate will remain at 3.4%, which is extremely low.
The RBA is raising rates despite inflation not being under control. It has delivered three consecutive hikes of 25 basis point, bringing the cash rate up to 3.10%. There are growing rumors that the RBA may end its current rate cycle by 2023. The most likely scenario is another 25-bp increase at the next meeting, which will take place in February.
Markets eye Fed rate hike
A record year of tightening from the Federal Reserve is expected to end with a 50-basis point hike at today’s final meeting of 2022. It’s interesting that the meeting occurs just…