The Reserve Bank of Australia surprised markets by unexpectedly raising its interest rate by 0.25% to 4.10%, causing the Australian Dollar to strengthen.
- The Reserve Bank of Australia hiked its interest rate yesterday by 0.25% although it was widely expected to keep rates steady. The Cash Rate now stands at 4.10%.Governor Lowe justified the hike by saying that although Australian inflation is past its peak, at 7% it remains too high, and there needs to be more confidence that the rate will return to its target level of 2%. The surprise rate rise triggered a boost for the Aussie, with the AUD/USD currency pair rising by as much as 0.9% following the announcement.
- Global stock markets continue to look mostly bullish this week, led by Asian equity markets, especially Japan, which is seeing a strong bull market in stocks as the country enjoys an economic boom following its full post-Covid reopening. Japanese equity indices such as the Nikkei 225 are powering ahead to levels not seen in decades, which will be of interest to trend traders.
- In the Forex market, the US Dollar is falling, in line with its long-term bearish trend. Action has been dominated so far today by weakness in the Japanese Yen and strength in the Australian Dollar. However, trend traders will probably still be looking for long trades in the USD/JPY currency pair which recently reached a new 6-month high price.
- Yesterday’s release of Swiss CPI (inflation) data saw a month-on-month rise of 0.3%, exactly in line with expectations.
- Yesterday’s release of US ISM Services PMI saw the data a little weaker than expected.
- There will be a release of Australian GDP data later today, which is expected to show growth of 0.3% over the past quarter.