Australian Dollar Mixed After RBA Decision
07 June 2022 - 01:07PM
RTTF2
The Australian dollar showed mixed trading against its major
counterparts in the Asian session on Tuesday, after the Reserve
Bank of Australia raised its key interest rate by 50 basis points
and signalled more steps in the process of normalizing monetary
conditions in the period ahead.
The RBA decided to lift the cash rate to 0.85 percent from 0.35
percent, exceeding economists' expectations.
The board also increased the interest rate on Exchange
Settlement balances by 50 basis points to 75 basis points.
The RBA said it would take further steps in the process of
normalizing monetary conditions over the months ahead.
"The size and timing of future interest rate increases will be
guided by the incoming data and the Board's assessment of the
outlook for inflation and the labour market. The Board is committed
to doing what is necessary to ensure that inflation in Australia
returns to target over time," it added.
Asian stock markets are trading mostly lower as treasury yields
spiked up on rising prospects of aggressive policy tightening by
the U.S. Federal Reserve to combat inflation.
The aussie retreated to 0.7166 against the greenback, from a
4-day high of 0.7245 hit at 12:30 am ET. This may be compared to a
multi-day low of 0.7159 seen earlier in the session. If the aussie
falls further, 0.70 is possibly seen as its next support level.
The aussie firmed to 96.11 against the yen, its highest level
since June 2015. The aussie may possibly face resistance around the
98.00 level.
The aussie pulled back to 1.4894 against the euro, from near a
5-week high of 1.4759 touched at 12:30 am ET. The aussie is seen
finding support around the 1.50 level.
The aussie rallied to 1.1162 against the kiwi, a level unseen
since August 2018. The currency is likely to face resistance around
the 1.14 level.
Looking ahead, U.K. services and German construction PMIs for
May are due out in the European session.
U.S. and Canadian trade data for April, Canada Ivey PMI for May
and U.S. consumer credit for for April will be released in the New
York session.
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