- The FOMC finalized its plans to shrink bond holdings.
- RBA shifted towards a hawkish pivot as it dropped its ‘patient’ stance on the inflation developments.
AUD/USD was under pressure on Wednesday, despite the hawkish twist at the Reserve Bank of Australia in the prior Asian session. AUD/USD succumbed to a hawkish Federal Reserve Open market Committee meeting minutes instead, falling from 0.7593 to a low of 0.7485 and losing 1.14% in the move.
At the time of writing, AUD/USD is trading around 0.75 the figure and flat o the session so far as traders get set for the Trade Balance figures. ''For February, we anticipate a $13.2bn trade surplus, within a whisker of the $13.3bn peak last July (median forecast $11.7bn). Export earnings surged 7.6% in January (+$3.5bn), led by metal ores (+$1.9bn),'' analysts at Westpac said.
Meanwhile, according to the minutes of the March FOMC meeting, participants judged that it would be appropriate to move the stance of monetary policy towards a neutral posture expeditiously, reported Reuters. The FOMC finalized its plans to shrink bond holdings in an aggressive effort to curb rising prices.
The Fed is preparing to shrink the $9tn balance sheet at a pace of roughly $95bn a month. Additionally, "many participants noted that one or more 50 basis point increases in the target range could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified," the minutes said.
As for the Reserve Bank of Australia (RBA), the central bank shifted towards a hawkish pivot as it dropped its ‘patient’ stance on the inflation developments. Board members decided to keep the official cash rate (OCR) steady at a record low of 0.10% during their April 5 monetary policy meeting. The monetary policy statement read that the Australian economy remains resilient and spending is picking up following the omicron setback.