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Greenback Extends Bounce Off 50-dma Support

FOREX
  • The RBA surprised markets overnight, raising rates by 50bps against expectations of a 25bps move, initially providing a considerable leg higher for the AUD. AUD/USD spiked to touch 0.7246 before fading in the subsequent hour or so, putting AUD/USD in minor negative territory ahead of the NY crossover. The decision has prompted a number of sell-side analysts to bring forward forecasts for the next 50bps hike, putting the bank on a faster, quicker approach to policy than expected.
  • Outside of the AUD, the USD is on the front foot, extending the late recovery seen during Monday hours as the USD Index bounces further off key support at the 101.81 50-dma. USD/JPY remains a key pair to watch, with Y133.00 the nearest handle as the JPY remains at the lower levels of the G10 table despite softer equity markets this morning.
  • Trade data takes focus going forward, with US and Canadian trade balance figures for April on the docket. Canada's Ivey PMI follows shortly afterwards.

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