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AUD on Top Following Chunkier Rate Hike

FOREX
  • AUD outperforms all others early Tuesday, with the RBA surprising markets overnight with a 25bps rate hike to 0.35% vs. Expectations of a 15bps tweak. In the subsequent press conference, governor Lowe flagged that the bank could raise rates as high as 1.5% by the end of 2022, and to 2.5% at a cyclical peak.
  • In response, AUD/USD made light work of Monday's 0.7082, rallying to just shy of 0.7150 before the pair faded somewhat.
  • NZD is softer in comparison, helping AUD/NZD surge well north of the 1.10 handle for the first time since August 2020. Strength north of 1.1065 would mark fresh four year highs.
  • GBP is trading more solidly following the return of UK traders after Monday's bank holiday. GBP/USD is back above the 1.25 level for now, although the outlook remains bearish following last week's acceleration of the downtrend. Price has recently cleared 1.2974, Apr 13 low and 1.2676, last printed in September 2020. This has reinforced bearish conditions. The trend remains oversold, however, a reversal pattern is still required to signal a short-term base and a possible reversal.
  • US factory orders and final March durables goods data cross alongside JOLTS at 1500BST/1000ET, with BoC's Rogers also on the docket. Members of both the Fed's FOMC and BoE's MPC remain in pre-meeting media blackout periods.
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