RBI Monetary Policy
The Dollar/Rupee pair reacted neutrally after the policy. The pair traded at 82.5500 levels, down 0.04%. It’s expected that the pair may trade below 82.7500 levels. The pair could retreat towards 82.4500-82.2525 in days to come.
On Thursday, the Reserve Bank of India maintained the same interest rate, noting the Indian economy’s recent resilience and stability. However, rates will probably continue to rise for a longer period of time to further reduce inflation.
RBI has kept the policy repo rate unchanged at 6.5% in a unanimous decision. Standing Deposit Facility Rate is still at 6.25%, and Bank Rate and Marginal Standing Facility Rate are still at 6.75%. The emphasis is still on reducing accommodation to ensure that inflation gradually approaches the objective.
However, Governor Shaktikanta Das noted that despite recent improvements in the inflation rate. When revising its monetary policy further this year, the bank would continue to keep an eye out for any price risks to the upside.
Following an 18-month low in April, the consumer price index (CPI) inflation figure that is published next week is predicted to show that inflation stayed strong through May.
The RBI is set to carry out further withdrawal of the accommodative monetary policy. Das said, however, he did not say whether the action would result in additional rate increases.
The governor of the RBI issued a warning, predicting that inflation will likely trend just above 5% in fiscal 2024 and will not, in the near future, fall below the bank’s goal level.
The Dollar/Rupee pair reacted neutrally after the policy. The pair traded at 82.5500 levels, down 0.04%. It’s expected that the pair may trade below 82.7500 levels. The pair could retreat towards 82.4500-82.2525 in days to come.
Further, on the upside, 82.8500 will act as a massive resistance and above it, the pair could test 83.05-83.30.
Adding to this, U.S. Fed and ECB policy is scheduled to release next week, which will bring huge volatility in entire Asian currencies. In light of conflicting indicators regarding the US economy, markets are generally divided over whether the Fed would raise or keep interest rates.
The ECB is widely expected to continue hiking interest rates with inflation remaining well above the central bank’s 2.0% target.
Bank of Canada
CAD USD – The pair is expected to remain in an upward direction, it could test 0.7570-0.7650 very soon.
The Bank of Canada on Wednesday hiked its overnight rate to a 22-year high of 4.75%, and markets forecast yet another increase next month to ratchet down an overheating economy and stubbornly high inflation.
After increasing borrowing prices eight times since March 2022 to a 15-year high of 4.50% – the fastest tightening cycle in the bank’s history – the central bank had been on hold since January to evaluate the effects of prior hikes.
Unexpectedly high consumer spending, a rise in service demand, an uptick in housing activity, and a tight labour market demonstrate that excess demand is more enduring than previously thought, according to a statement from the central bank.
The Bank of Canada (BoC) stated that “concerns have increased that CPI inflation could get stuck materially above the 2% target” despite an increase in inflation in April and high three-month measures of core inflation.
The Canadian dollar (CADUSD) rose by 0.21% and hit 0.7503, the highest level since 8 May 2023.00. The currency pair is expected to remain in an upward direction, it could test 0.7570-0.7650 very soon.
Reserve Bank of Australia:
AUDUSD – will expect to remain bullish and could test 0.670025-0.6824 in a near term
The Reserve Bank of Australia raised interest rates by a quarter-point to 4.10% from 3.85% which was an 11-year high and warned that further tightening may be required to ensure that inflation returns to target.
The Australian dollar jumped to a one-month high following the RBA’s rate hike, which could get a nudge from Australian trade data on Thursday. The surplus is expected to decrease from March to A$14 billion, according to the average prediction.
As markets rapidly moved to price in an above-even likelihood of a further rate increase next month, the hawkish message sent the local dollar soaring and bond yields skyrocketing.
The Australian dollar jumped 0.8% to $0.66726, the highest level since 23 May 2023. The currency pair is expected to strengthen further and may test 0.670025-0.68240 in the near term.