Aussie Tanks On Divided RBA Hike
Post-Hike Sell-Off
The Aussie Dollar is seeing heavy selling today on the back of the November RBA rate decision overnight. The bank hiked rates, as expected, lifting the headline cash rate to 2.85% from 2.6% prior. However, the move was well signalled and well expected by traders and so the accompanying lack of forward guidance, as well as a divided vote, seemingly unnerved traders with AUD falling accordingly. Tightening expectations had been elevated into the meeting on the back of hawkish comments from the RBA at and since the last meeting, along with hotter-than-forecast CPI.
Mixed Signals From RBA
While the bank acknowledged the risks from the stickiness in higher inflation prices, it stopped short of signalling any intent to hike further tightening to come, leading to a dip in market pricing for near-term follow-up hikes. Indeed, only 6 of the nine policymakers voted in favour of a hike, further obscuring the outlook on further tightening. The decision also came with a rather dire warning from RBA governor Bullock who signalled that unemployment would need to lift in order for inflation to come down from current levels, while warning that higher rates and weaker growth could make households feel like the country is in recession even though it isn’t. On the back of the meeting, AUD looks vulnerable to further downside near-term, particularly if we see any lift in US jobs data on Friday and restrengthening of USD.
Technical Views
AUDUSD
The failure to break back above the .7050 level has seen price reversing sharply lower again. Focus is now on a retest of the bull trend line from last Nov lows and the .6896 structural level. This is a key pivot for the market which, if broken, will be firmly bearish turning focus to .6703 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.