Aussie Rose on Speculation About the RBA’s Tightening Plans

The risk-sensitive Australian dollar was firm on growing speculation about the Reserve Bank of Australia’s (RBA) tightening plans. At the same time, the Japanese yen steadied as the Bank of Japan kept policy steady as anticipated.

The market is now focusing on the European Central Bank’s rates review later on Wednesday. Remarkably, investors are waiting for clues on how it plans to navigate accelerating global inflation.

Aussie was at $0.7504, close to its three-month peak as Australian bond yields rose highest since 2019. The rise came after the central bank declined to buy a government bond.

Notably, the yield target is central to the Reserve Bank of Australia’s case that the 0.1% cash rate will not grow until 2024. Remarkably, any failure to keep it fuels market wagers that rates will have to increase much earlier, perhaps even by mid-2022

The U.S. dollar declined 0.16% versus the Japanese yen to 113.63, close to its four-year peak of 114.69 hit October 20. Notably, the Bank of Japan maintained monetary policy settings steady on Thursday, as widely anticipated. 

The Japanese Central Bank Also Lowered Its Consumer Inflation Forecast for March 2022 to 0%

Moreover, the Japanese central bank also lowered its consumer inflation forecast for the year ending in March 2022 to 0% from 0.6%. The overall takeaway bolstered market bets it will lag other central banks in dialing back crisis-mode policies.

Additionally, the euro was slightly changed at $1.1606 ahead of the European Central Bank’s meeting. The currency stood above its 15-month low of $1.1523 reached earlier this month.

Investors are also looking for ECB’s stance on soaring global consumer prices and for any clues on the outlook for its policy stance.

The British pound was traded at $1.3745.

In cryptocurrencies, the dominant cryptocurrency, bitcoin, was at $58,350. It continued its decline from its record high of $67,016 on October 20. Meanwhile, the second-largest cryptocurrency, ether, was steady at $3,926.