Daily Alert – Tuesday 7th November 2023: RBA hikes as inflation turns up

Mark NugentDaily Alert, Nov 2023

Daily Alert – Tuesday 7th November 2023: RBA hikes as inflation turns up

Good afternoon.

As predicted, things are quiet.

We saw the Reserve Bank of Australia hike interest rates by 25-basis points to 4.35% after pausing for the last three meetings. The reason? Inflation has failed to read the script and has risen for each of the last two months. That wasn’t in the plan. The markets are now expecting a December hike as well. The AUD fell. Normally expectations of a hike would cause a currency to rise, but there is the bigger picture of the damage persistent and rising inflation can do to an economy.

I went long on GBPUSD last night as the USD reversed the losses from last week’s over-reaction to some poor economic data. So, it was a classic reversal trade, and in line with my bias for both USD and GBP. That’s a high-probability trade in my book. So far it is doing quite nicely.

I’ll be back tomorrow.

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