Free Trial

Aussie Dollar Rises Ahead Of RBA Rate Decision, Risk-On Flows Take Hold

FOREX

Risk-on flows have intensified in a reversal of Monday's price action, even as broader headline flow has failed to provide much in the way of notable catalysts. The Aussie dollar is leading commodity-tied FX space higher ahead of RBA rate decision.

  • Australia's central bank may raise the cash rate target today. We are leaning towards a 15bp hike but concede that this is a close call.
  • AUD/USD implied overnight volatility crept higher, reaching its highest point since the eve of the RBA's monetary policy decision delivered on Mar 2, 2021.
  • The greenback dropped back after yesterday's rally. Reminder that the FOMC also holds a policy meeting this week, with the outcome due to be announced on Wednesday.
  • Offshore yuan trimmed its initial gains after CCTV reported that the authorities in Hangzhou slapped curbs on an individual surnamed "Ma", even as Alibaba's shares rebounded as a statement from local police clarified that its co-founder could not be the person in question.
  • Activity in Asia was limited by holiday closures in some major regional financial centres including mainland China, Japan and Singapore.
  • Later in the day, focus will turn to U.S. factory orders & final durable goods orders, EZ jobs data as well as comments from BoC's Rogers.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.