Aussie Rates At Highest Level Since 2012
The Aussie is soaring today on the back of the RBA unexpectedly announcing a fresh rate hike at its May meeting overnight. The bank hiked rates from 3.6% to 3.85%, marking their highest level since 2012, despite having made the decision at the prior meeting to keep rates on hold, which it was widely expected to do again today. Perhaps more confusingly, the hike comes on the back of Australian inflation having fallen lower last month. However, explaining the decision, RBA governor Lowe said that while inflation has likely peaked, it is still not coming down fast enough and, at 7%, remains well above the bank’s 2% - 3% target. The RBA noted strength in the labour market, population increases and higher property prices as contributing factors to its decision.
Looking at the broader central bank backdrop, the move has been interpreted as a necessary adjustment ahead of further expected rate hikes from the Fed and ECB this week. Consequently, the outlook for the RBA regarding further hikes will likely largely depend on the Fed tomorrow and whether they signal any further hikes are likely. AUD is moving sharply higher against both USD and EUR today, indeed, across the board, and looks poised for further gains near term if risk sentiment remains supportive.
Technical Views
AUDUSD
The sell off in the Aussie from YTD highs has seen the pair grinding lower within a clear bearish channel. The decline has recently stalled along the .6535 level support with the pair now trying to break back above .6681 and the channel highs. If seen, focus will turn to .6857 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.