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Aussie Ignores Interest Rate Forecast As Threat of Trade Wars Wanes

May 21, 2018 at 12:38 by Vladimir Vyun

Australian dollar billsNational Australia Bank pushed its forecast of an interest rate hike from 2018 to mid-2019. Yet that did not prevent a rally of the Australian dollar, caused by signs of waning trade tensions between the United States and China.

Previously, NAB was saying that a rate hike in 2018 is still possible. Yet now, the bank pushed back the expected data of a hike to mid-2019, saying:

The change reflects the fact there’s no sign as yet of stronger wages growth and unemployment has been stuck at around 5.5% for the best part of a year. We still expect the economy to strengthen, leading to a declining unemployment rate.

Usually, that would hurt the Aussie. But it did not happen today as markets were focused on the reports that the world’s two biggest economies have put a trade war “on hold.” China is Australia’s major trading partner, therefore such news bodes well for the well-being of the Australian economy.

AUD/USD rose from 0.7520 to 0.7532 as of 12:31 GMT today after slipping to 0.7502 intraday. AUD/JPY rallied from 83.38 to 83.81. EUR/AUD declined from 1.5639 to 1.5611.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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