The U.S Federal Reserve raised their official interest rates overnight by a further 25 basis points marking the third such rise since the December meeting of last year. The new official interest rate is now 1.25%, just 25 basis points shy of Australia's cash rate at 1.5%. Markets are still anticipating further rate hikes from the U.S Federal Reserve, however these bets may have been trimmed overnight given the release of poorer than expected retail sales and CPI figures which actually turned negative. Whether this is a blip on the radar or something more sinister is still unknown but it appears the Federal Reserve seem hell bent on raising rates regardless of the data - perhaps so they have ammunition in the form of rate cuts should U.S asset prices (namely stocks) see a strong correction at some point in the next 6-12 months.
Ahead today is local employment figures and the unemployment rate, both due around 11.30am. The market is expecting to see around 10K new jobs created but no change to the unemployment rate from 5.7%. As has been the case lately economists and traders alike will need to sort through the data to determine the make up of the employment number, specifically the ratio of full-time to part-time jobs. Full time jobs tend to have a greater positive impact on the Aussie dollar.
For those watching the GBP: we've had a strong run up following the U.K elections with GBP now hovering around the low 0.59's vs. the Aussie, but with the Bank of England (BOE)meeting to determine interest rates tonight this momentum may shift. Whilst the market is not expecting any cut to U.K interest rates from 0.25% all eyes will be on the monetary policy statement and any next steps from the BOE to support the Pound.