Australia inflation amid Iran war oil shock, rate hike likely
Australia's inflation has risen to 4.6%, driven by higher global oil prices due to the Iran conflict, increasing the likelihood of a Reserve Bank rate hike. The surge reflects broader inflationary pressures affecting global markets. Meanwhile, traders see minimal chance of a Fed rate cut in June, expecting the central bank to remain hawkish through mid-summer. Market data shows strong confidence in rate stability through July, with limited trading volume and high thresholds for price shifts.
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Australia’s inflation has jumped to 4.6%, largely driven by the Iran war’s impact on global oil prices, making a rate hike by the Reserve Bank next Tuesday more likely. The odds of the Fed cutting rates by 50+ bps after its June meeting sit at a paltry 4.2% YES. The spike in Australian inflation reflects global inflationary pressure from the Iran conflict. The market for a Fed decision in June shows little confidence in a rate cut, at 4.2% YES for a 25 bps cut. The July market is much higher, at 86.5% YES for no change. Traders appear convinced that inflation concerns will keep the Fed hawkish through at least mid-summer. Volume in the June market is modest: $45,593/day face value, translating to $2,646 in actual USDC traded daily.
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