RBA meeting minutes - music to the ear of the ASX200
In a light week of economic data ahead of the holiday season, the RBA minutes from the December Board meeting were in focus this morning as traders scanned for clues around the future of the RBA's QE program ahead of its all important February 2022 meeting.
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Three possible options for the banks QE program were discussed by the Board, with the final decision dependent on the criteria previously outlined “namely, progress towards the Board's goals for employment and inflation, the actions of other central banks and the functioning of the Australian bond market.”
- The first option was to reduce the pace of purchases from mid February with an expectation of a likely end point in May 2022.
- The second option was to reduce the pace of purchases and review it again in May 2022.
- The third option was to cease purchases altogether in mid February.
The recent hawkish shift by the Federal Reserve, the Bank of England, and the ECB, along with the bumper November Australian jobs report, presumably put Option 3 out front as the RBA’s preferred option at this point, providing Omicron does not derail the recovery.
While the RBA is contemplating winding up its QE program, its message on rate rises remains one of patience - Music to the ears of the ASX200, which rallied 30 points after the minute's release to be trading near 7330 at the time of writing.
As viewed on the chart below, the correction from the August 7632 has been well supported in recent weeks by the 200-day moving average currently at 7263.
However, to confirm the correction from the August 7632 high is complete and that a belated end-of-year rally has commenced, the ASX200 needs to break above trendline resistance at 7430/40 and then the layer of horizontal resistance at 7480/90.
Aware that should the ASX200 first lose support 7165/45 area, it would warn a deeper decline towards 7000 is underway.
Source Tradingview. The figures stated areas of December 21st, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
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Three possible options for the banks QE program were discussed by the Board, with the final decision dependent on the criteria previously outlined “namely, progress towards the Board's goals for employment and inflation, the actions of other central banks and the functioning of the Australian bond market.”
- The first option was to reduce the pace of purchases from mid February with an expectation of a likely end point in May 2022.
- The second option was to reduce the pace of purchases and review it again in May 2022.
- The third option was to cease purchases altogether in mid February.
The recent hawkish shift by the Federal Reserve, the Bank of England, and the ECB, along with the bumper November Australian jobs report, presumably put Option 3 out front as the RBA’s preferred option at this point, providing Omicron does not derail the recovery.
While the RBA is contemplating winding up its QE program, its message on rate rises remains one of patience - Music to the ears of the ASX200, which rallied 30 points after the minute's release to be trading near 7330 at the time of writing.
As viewed on the chart below, the correction from the August 7632 has been well supported in recent weeks by the 200-day moving average currently at 7263.
However, to confirm the correction from the August 7632 high is complete and that a belated end-of-year rally has commenced, the ASX200 needs to break above trendline resistance at 7430/40 and then the layer of horizontal resistance at 7480/90.
Aware that should the ASX200 first lose support 7165/45 area, it would warn a deeper decline towards 7000 is underway.
Source Tradingview. The figures stated areas of December 21st, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
- Open a Forex.com account, or log in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
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