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Forex Today: RBA Rate Hike Surprise

The Reserve Bank of Australia surprises the market with a 0.25% rate hike, when a hike of only 0.15% had been expected.

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  • The Reserve Bank of Australia hiked rates by 0.25% at a time when many analysts were expecting a hike of only 0.15%. This is a minor hawkish tilt to the RBA’s monetary policy, and it saw the Aussie spike higher by about 1% against the USD.
  • Stock markets initially traded firmly lower yesterday, before rebounding strongly, with the S&P 500 almost touching its 1-year low made in May 2021. The volume traded in the S&P 500 was the highest seen in almost 2 months, so we may have seen buyers step in to form medium or even long-term support. The trend anyway is downwards, and the price reached a level not far from bear market territory (usually taken as -20% from the all-time high).
  • The Forex market was quiet yesterday, due partially to London being closed for a holiday yesterday, with the US Dollar and the market in general consolidating. The Dollar did push the Kiwi to another new 10-month low. Attention is focused on the greenback partly due to Wednesday’s FOMC meeting coming into focus, with markets now expecting a 0.50% rate hike and an announcement of the “commencement of the balance sheet runoff”, which will be another hawkish tilt.
  • Commodity markets mostly rose yesterday, but there were also plenty of losers, with only Cotton amongst agricultural commodities advancing to a new high price.
  • For the sixth week, Bitcoin and cryptocurrencies in general look depressed, although the falls are not dramatic. Volatility in the crypto sector has declined considerably over recent weeks.
  • Yesterday’s US ISM Manufacturing PMI data came in somewhat lower than had been expected.
  • There will be a release of US JOLTS Job Openings data later today.
  • There will be a release of New Zealand Unemployment data later today.
  • It is a public holiday in the China and Japan today.
  • Daily new coronavirus cases globally fell last week for the sixth consecutive week.
  • It is estimated that 65.5% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 6.5% of the global population is confirmed to have contracted the virus at some time.
  • Total confirmed new coronavirus cases worldwide stand at over 513.6 million with an average case fatality rate of 1.22%.
  • The rate of new coronavirus infections appears to now be increasing only in South Africa, Cyprus, Honduras, the Solomon Islands, Taiwan, and Trinidad.
  • Coronavirus restrictions have been tightened in Beijing, China, following the lockdown in Shanghai, which is beginning to ease, with public disquiet observed over late delivery of food supplies to the quarantined population. The lockdown has caused some disruption to global supply chains.  
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