After the Federal Reserve hiked rates and showed little sign of taking the foot (well, a toe) off the 'tightening' pedal there will be other central banks that hike today and in following days.
Especially those with a currency pegged to the USD.
But, I'm biased, I'll be looking most closely at China and what the People's Bank of China do. One, because AUD traders need to pay close attention to developments in China, the AUD is often cited as a 'China proxy'. And also, because China's economy is huge and growing fast and what happens in China does not stay in China.
And so, the Fed hikes, what will the PBOC do? The Bank has been on a gentle tightening path, trying to act to 'deleverage' the economy. They won't be pushing too far with this, as I've said many times in past months, with the Communist Party's 19th National Congress coming up in (northern) autumn of this year. Leadership will not want a weakening economy going into this.
So, what for the PBOC in response to the Fed move? Its a tricky task to divine official moves in China, but the most likely path for the PBOC in response is continued gentle tightening rather than any sharp moves. And continued targeted easing when and where needed (most recently, for example in the MLF injection on June 6 ... apart from daily OMOs that is). There shouldn't be too much from China to scare AUd bulls.
ps. We got data from China late yesterday (China time) - more strong credit growth. Mike had the numbers but I'll be back with more on this.
