The ASX regained some of its losses this morning, with the S&P/ASX200 rising 0.41% to 7,680.64 as of 11:15 am AEST, following an ugly few days that saw billions of dollars wiped out.
The index has lost a total of 5.09% since the start of the month, but is nevertheless up 1.18% so far this year.
It comes after the Reserve Bank of Australia left interest rates on hold at 4.35% yesterday, despite ongoing concerns about inflation.
Saxo Bank’s Head of FX Strategy Charu Chanana says the lack of a rate cut could be seen as a policy misstep as global markets grow increasingly skittish of a potential global recession.
“This could be problematic if global growth deteriorates beyond the soft landing many have hoped for,” she says.
“Much like the Fed, the RBA may be vulnerable to market concerns about being behind the curve. This makes it challenging for the AUD to rally on the back of an overall hawkish meeting outcome.”
Chanana says the risk-vs-reward is tilted bearish for the Australian dollar, given a range of current concerns besides recession, including the unwinding of Yen carry trades, scope for a dovish repricing in the RBA curve, and a potential rate cut in China.
Write to Heidi Ellis at Mining.com.au
Images: iStock
