Hawkish Tilt From RBA Lends Support To AUD

A hawkish pivot in the RBA's guidance on interest rates allowed the Aussie dollar to outperform Tuesday. Policymakers emphasised upside risks to inflation and scrapped the reference to "patience" from their most recent monetary policy statement, setting the stage for future rate hikes. This prompted participants to add some hawkish cash rate bets, making the Bank's June meeting a very live affair. When this is being typed, ~30bp worth of rate hikes is priced for the June decision.

• To give the full picture of yesterday's AUD/USD price action, hawkish Fedspeak sapped some strength from the pair later in the day, as Lael Brainard signalled potential for rapid balance sheet reduction starting as soon as next month.
• AUD/USD last operates at $0.7583, up 4 pips on the day. A clearance of Jun 16, 2021 high of $0.7716 would confirm underlying bullish momentum. Bears keep an eye on $0.7457, the low print of Mar 29.
• Focus turns to Australian trade data, due for release on Thursday. In the meantime, China's Caixin Services PMI may provide some interest today.