A$ Gives Up Some Post-RBA Gains

Aussie was one of the stronger performers in the G10 yesterday after the RBA’s surprise 25bp hike, but it still underperformed the yen and the kiwi. AUDUSD is up 0.5% to 0.6662 but down off the intraday high of 0.6717 following the rate decision. The USD index fell 0.2%.

• RBA Governor Lowe spoke at the Reserve Bank Board Dinner and reiterated that the Board had to hike to ensure that inflation returned to target by mid-2025. He was very concerned about the strength of services inflation and overseas experience is signalling upside risks.
• Following the RBA move AUDUSD broke through the 20-day EMA and has opened up the 50-day EMA at 0.6711 as initial resistance (this level was breached briefly on Tuesday). Key support to watch is 0.6565, the March 10 low.
• Aussie unwound its post-RBA gains against the kiwi and yen with AUDNZD down 0.2% to 1.0726 and AUDJPY -0.2% to 90.96. AUDEUR is up 0.2% to 0.6054 and AUDGBP +0.7% to 0.5342.
• Equity markets were weaker with the S&P down 1.2% and the Eurostoxx -1.5%. Oil prices sank with WTI down 5.6% to $71.55/bbl driven by weaker risk appetite and disappointing US job opening data. Copper prices were 1.7% lower and iron ore is around $104.50/t.
• Today March retail sales print and are expected to post another 0.2% m/m rise. Marion Kohler, Head of Economic Analysis, is due to speak at 1455AEST. Then later the FOMC meet and another 25bp hike is expected.