Technical Analysis

Aussie Slips After Interest Rate Hike

    Share on Facebook Share on Twitter

    The Australian dollar is in negative territory today. In the European session, is trading at 0.6763, down 0.51%.

    RBA raises by 50bp

    The RBA isn’t getting much love, even after raising rates by 50 basis points earlier today. Investors responded to the rate hike by sending the Australian dollar lower, in a repeat of the Aussie’s fall after the August rate hike. The central bank has now raised the cash rate to 2.35% after four successive rate hikes of 50bp. The Australian dollar has lost ground despite the large rate hike, as the markets had priced in the move and aren’t showing any enthusiasm.

    Today’s move brings rates close to the neutral level of around 2.5%, which means that the RBA is likely to deliver one more 50bp hike and then scale back to 25bp increases, contingent on inflation and the strength of the labour market. Governor Lowe’s rate statement didn’t add much and made no changes to the inflation forecast.

    Lowe will speak about monetary policy on Thursday, and the markets will be looking for some insights.

    The RBA expects to peak at just below 8% before the end of the year, dropping to around 3% by 2023. The economy is in relatively good shape, and the central bank is hoping to steer the economy to a soft landing and avoid a recession as higher interest rates slow down economic activity.

    Market attention now shifts to the Australian release on Wednesday, with the markets expecting an improvement in Q2. Domestic activity remains strong despite rising inflation, and Australia enjoyed a record trade surplus in June. This is expected to help boost GDP to 3.5% in Q2, following a 3.3% gain in Q1.

    AUD/USD Daily Chart

    AUD/USD Technical

    AUD/USD faces resistance at 0.6846 and 0.6922
    There is support at 0.6737 and 0.6661

    Original Post

    Originally Published Here -Source link

    0 0 votes
    Article Rating

    Why China’s central bank is shoring up the yuan

    Previous article

    Yen skids past 142 per dollar, sterling clings onto early gains By Reuters

    Next article

    You may also like

    Notify of
    Inline Feedbacks
    View all comments