ForexLive Asia-Pacific FX news wrap: RBA to discuss a pause in rate hike cycle | Forexlive

The
minutes of the Reserve Bank of Australia March 2023 meeting were
published today. The most notable point was that:

Members
agreed to reconsider the case for a pause at the (April meeting),
recognising that pausing would allow additional time to reassess the
outlook for the economy. At what point it will be appropriate to
pause will be determined by the data and the Board’s assessment of
the outlook.

Note
that the March meeting was held before the current bout of bank
failures. If the RBA Board is looking to pause this turmoil would
seem to be enough justification given that:

while
inflation is still well above target it is showing signs of peaking
economic
activity is showing signs of slowing
yesterday
Christopher Kent, Reserve Bank of Australia Assistant Governor
(Financial Markets) said that lags in policy transmission meant the
full impact of RBA rate hikes so far are yet to be felt

The
case for an RBA pause in April is firming.

AUD/USD
dirbbled a little lower today, but with NZD/USD and also CAD dipping
a little against the USD it doesn’t seem that the RBA minutes
really had too much of an impact on the Australian dollar. Perhaps
its yet to come.

There
was some (equity) market moving news from the US. The US Treasury is
examining unlimited deposit guarantees (via the FDIC) if the bank
crisis worsens. As I pointed out, there is a huge practical problem
with this:

US
bank deposits are around US$18 tln
The
FDIC insurance fund is around US$125 bn
The
FDIC insurance fund is unfunded

Still,
US equity index futures jumped higher on the headline. There
was a retracement but as I post the emini S&P500 contract, ES,
for example, is higher on the session.

Regional
equities are higher (Japan is closed for a holiday today).

Asian
equity markets: