Aussie jumps after RBA “surprise”
The Australian dollar spiked higher yesterday after the Reserve Bank of Australia announced another surprise 25-basis point rate hike taking official rates to an 11-year high of 4.10%.
The market had only seen a 33% chance of a hike going into the announcement, but last week’s higher inflation reading, and a 5.75% increase in the Australian minimum wage announced on Friday, spurred the RBA to act.
The AUD/USD jumped higher with the pair up 0.9% as it hit three-week highs.
The Aussie was higher in other markets with the AUD/EUR up 1.1% and the AUD/JPY up 0.9%.
Australian news remains in focus today with RBA governor Philip Lowe due to speak at 9.20am AEST while March-quarter GDP is released at 11.30am. The market is looking for annual GDP growth to gain 2.4% – down from 2.7% in the December quarter.
USD drifts higher as markets fall into lull
In other markets, the US dollar drifted higher, in mostly quieter trade. The USD index gained 0.2%.
After recent fireworks in markets, driven around concerns about the US debt ceiling, investors have turned more relaxed, with US shares virtually unmoved overnight.
The S&P 500 gained 0.2% while the Nasdaq was flat.
Asian FX markets were stronger. The NZD/USD gained 0.1% while USD/SGD fell 0.1%.
China trade due
The USD/CNH was stronger, however, with the pair up 0.1%.
The Chinese yuan remains pressured by worries about a slowing economy.
Today’s trade balance number, due around 1.00pm AEST, might provide further evidence of a Chinese slowdown, with last month’s release seeing a 7.9% fall in imports over the previous 12 months.
Exports remained positive at 8.0% but were down sharply from the previous month’s 15% gain.
Aussie jumps after RBA “surprise”
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 5 – 9 June
All times AEST
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