Australia’s central bank surprised markets with an unexpected 0.25% interest rate hike to 4.10%, sending the Australian dollar stronger.
advertisement
- The Reserve Bank of Australia raised interest rates by 0.25 percent yesterday although it was widely expected to keep rates steady. The cash rate is now 4.10%. Governor Lowe justified the increase by saying that although Australia’s inflation is past its peak, it remains too high at 7% and there is more confidence that the rate will return to the target level. 2%. A surprise rate hike provided momentum for the Aussiewith currency pair AUD/USD rose as much as 0.9% after the announcement.
- Global equity markets continue to look largely bullish this week, led Asian stock markets, especially Japanwhich is experiencing a strong bull market in stocks as the country experiences an economic boom after fully reopening after Covid. Japanese stock indices such as Nikkei 225 are driving themselves to a level not seen in decadeswhich will be of interest to trend traders.
- The US dollar is falling in the forex marketin line with its long-term bearish trend. Action so far today has been dominated by weakness in the Japanese yen and strength in the Australian dollar. However, trend traders will likely still look for long trades in USD/JPY currency pair that recently hit a new 6-month high.
- Yesterday’s release of Swiss CPI (inflation) data saw a month-on-month increase of 0.3%, exactly in line with expectations.
- Yesterday’s release of the US ISM Services PMI saw slightly weaker data than expected.
- Later today, data will be released on Australia’s GDP, which is expected to show growth of 0.3% in the final quarter.