AUD/USD jumps towards 0.6700 as RBA again surprises with 0.25% rate hike, Governor Lowe’s speech eyed
- AUD/USD picks up bids to refresh intraday high during four-day uptrend.
- RBA announces a surprise rate increase of 0.25% to 4.10%.
- Cautious optimism in the market, upbeat Aussie Current Account Balance favor Aussie buyers despite RBA’s inaction.
- Speeches from RBA officials, Australia PMIs eyed for clear directions amid light calendar elsewhere.
AUD/USD gains near 50 basis points (bps) on the Reserve Bank of Australia’s (RBA) second surprise rate hike during early Tuesday. That said, the Aussie pair initially jumped to 0.6673 on the RBA’s verdict before retreating to 0.6668 by the press time.
That said, RBA defies market forecasts of announcing no change to its benchmark interest rate by fueling the key rate to 4.10% at the latest. It’s worth noting that the Australian central bank surprised markets in the previous monetary policy meeting with a 0.25% rate increase and hence some traders on the floor expected such a move ahead of the Interest Rate Decision.
As a result, early Wednesday’s speeches from RBA Governor Philip Lowe and Deputy Governor Michele Bullock will be the key to gaining any hints for future rate hikes from the Aussie central bank. The same, if offered, can propel AUD/USD prices.
Elsewhere, Australia’s first quarter (Q1) Current Account Balance flashed better-than-expected figures while the market sentiment remains dicey amid lackluster US stock futures and inactive Treasury bond yields.
While tracing the catalysts for the currently mixed mood, lack of uniform concerns about the Federal Reserve’s (Fed) rate hike and the diplomatic ties between the US and China seem to gain major attention. That said, headlines suggest the Sino-American talks are going smoothly but the Taiwan tension keeps poking the optimists. On the other hand, softer US data and previous Fed talks push traders to anticipate nearness to the policy pivot. However, the comments from International Monetary Fund (IMF) Managing Director Kristalina Georgieva hint at more rate hikes from the US central bank and challenge the US Dollar sellers. Furthermore, the US debt-ceiling deal passage and looming fears about the banking sector adds strength to the downside bias surrounding AUD/USD.
Amid these plays, the US Treasury bond yields remain pressured as traders rush to the US bonds for risk safety. That said, the US stock futures and the US Dollar Index (DXY) remain directionless of late.
Looking ahead, mixed sentiment and the US Dollar’s unimpressive performance keep the AUD/USD on the front foot, which in turn allows the Aussie pair to remain firmer and weigh on the US Dollar, as well as the other risk-sensitive assets. That said, a lack of major data/events can prod the Aussie pair traders ahead of Wednesday’s speeches from RBA Governor Philip Lowe and Deputy Governor Michele Bullock.
Technical analysis
AUD/USD rebounds from the support line of a falling wedge established in late December 2022, as well as stays beyond the 61.8% Fibonacci retracement of October 2022 to February 2023, which in turn joins upbeat oscillators to favor the Aussie pair buyers.
As a result, the risk-barometer pair is all set to confront a convergence of the 50% Fibonacci retracement level and the 50-DMA, around 0.6660, unless falling below the stated wedge’s bottom line, close to 0.6495 at the latest.