The Australian Central Bank (RBA) once again refused to defend government bond yields from rising above its target, causing the Aussie dollar to trade stronger today.
Entering the second day, April 2024 key bond yields rose as high as 0.76% against the central bank’s target of 0.1%.
So far, the RBA has yet to make an offer to buy April 2024 primary bonds at normal time for such operations.
Following the RBA's silent action, this has led to speculation that central bank policymakers are ready to abandon their bond -buying programs in the face of rising inflationary pressures.
The latest data on Wednesday, showed the average measure of core inflation as an indicator to the RBA rose higher than expected in the third quarter, thus lifting market expectations for the central bank to implement tightening earlier.
The RBA’s monetary policy meeting scheduled for next Tuesday will be the focus of investors, although previously Governor Philip Lowe said bond purchases would remain until February 2022.
Meanwhile, Australian retail sales and producer price index (PPI) data published during today’s Asian session also showed stronger readings.
The Aussie dollar strengthened to a three -month high by trading at around 0.7550 against the weaker USD.
