![]() ![]() “Overall, we expect 2023 will be a better year than 2022. ![]() ![]() In October 2022, the Australian government published its federal budget wherein the government cut its long-term iron ore price assumptions from $91 per tonne to $55 per tonne, underscoring the weakening in demand for Australia’s largest export. The looming threat of a global recession played a central role in AUD weakness in 2022. But activity indicators will be a guide to the extent that demand and hence inflationary pressures are abating,” said ANZ Research. “Inflation will remain a key focus for the RBA. The RBA reiterated its inflation-fighting stance in its December monetary meeting, saying that it will do “what is necessary” to return inflation to the central bank’s target band of 2% to 3%. Although this very lagging data point is mainly of academic interest, a rising number would still encourage hawkish rhetoric from the RBA." Australia’s inflation highest in over three decadesĪnalysts expected inflation to remain the near-term focus for most central banks including the RBA.Īlthough price pressures in Australia have come off peak levels, annual inflation still remained uncomfortably high, climbing to 7.3% in November 2022. "If the wage price index grew by 1.0% in the fourth quarter from the third – as it did in the third quarter from the second, the index would finally reach 3.5%. In the last quarter, the wage price index grew by 3.1%, which means that there is still room to inch higher, while inflation is currently running at 8.4% YoY." This was a keenly watched data point in 2021 when the Reserve Bank of Australia (RBA) tied its cash rate target to wage growth rising to a level consistent with target inflation of 3.5-4%. "Australia is set to release fourth-quarter wage price index data on 22 February. In 2022, AUD/EUR slipped 0.4%, AUD/GBP rose 4.8% and AUD/JPY increased about 6.8%.ĪUD extended its outperformance against USD in 2023 with AUD/USD rates gaining 1.3 year-to-date (YTD) as of 20 February. When compared to major currencies, the Aussie posted positive returns against the British pound and the Japanese yen in 2022. AUD closed the year on a strong note as the Aussie saw back-to-back monthly gains over the greenback in the last two months of 2022.ĭespite the late gains, however, AUD/USD closed the year about 6% lower in 2022 at 0.681. The market moved quickly to price in a slower pace of US Fed rate hikes going forward.ĪUD posted its best monthly return in more than two-and-a-half years in November 2022 by gaining about 6.1% against the USD. Most global currencies rose from their bottoms against the US dollar in November 2022 after October US inflation data came in lower than expected. ![]() In September 2022, AUD posted a monthly loss of 6.4% against the greenback, its worst monthly performance in over nine years. By 13 October 2022, AUD/USD fell to 0.6169, its lowest since April 2020. In contrast, the US dollar index ( DXY), which tracks the performance of the USD against a basket of major currencies, rose to its highest level in 20 years on the back of aggressive interest rate hikes from the US Fed. Since then, the Aussie has been on a steady decline against USD, weighed down by a number of factors including the Chinese real estate sector crisis, Australia-China tariff wars and an aggressive rate hike cycle by Fed. The AUD/USD rate surged about 45% from its March 2020 bottom to a near three-year high of 0.8 by February 2021, supported by recovering commodity and energy demand outlook. Having bottomed at a near two-decade low of 0.55 against the US dollar in March 2020, the Aussie would see a stellar rebound over the next 12 months. The Aussie lost over 12% in the first quarter of 2020. US30 US Wall Street 30 (USA 30, Dow Jones)Ībout AUD: Australian dollar vs global peersīack in March 2020, the Australian dollar crashed to its lowest point against the US dollar in over 18 years, as the Covid-19 pandemic pushed the world into lockdown. ![]()
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