The Reserve Bank of Australia (
) announced this morning that it would hold its benchmark rate
steady at 4.75% despite the recent surge in inflationary data
releases. The result was a sudden downturn in Australian dollar
(AUD) values across several of its currency pairings.
RBA Governor Glenn Stevens remarked that the record rise in
Aussie values should help prevent a breakout in prices, though
inflation is expected to gain some momentum in the months ahead.
recently touched 1.1011, its highest mark since the first days of
becoming a floating currency in 1983.
The resistance and support garnered around the Aussie recently
is generating enough pricing pressure, according to Stevens, to act
as a natural monetary check. Prices are prevented from
sky-rocketing out of control since interconnected costs and values
would make such a rise unpalatable to consumers.
With this stance by the RBA, it appears that speculation of a
rate hike has been disappointed and investors are beginning to
shift temporarily away from the Aussie in the short- to mid-term.
The connection of the Australia dollar to commodity prices has also
helped add weight on top of the Aussie's value considering the
recent dip in oil and silver prices.
Updating your outlook on the AUD may become necessary in the
near-term considering the RBA's stance on monetary policy has
shifted to one of hesitation. The recent string of inflationary
figures had many analysts expecting a rate hike in the near future
and began pricing in such information. The position that rates
would be held steady while the AUD reaches record highs means
monetary tightening will likely be delayed, possibly until 2012.
This should begin to have effects on the value of the AUD, pushing
against its latest bull-run.