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AUD/USD soars to 0.6950/55 zone after RBA rate hike

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  • AUD/USD has soared to around 0.6950/55 after the RBA announced a 25 basis point rate hike to 3.35%.
  • The RBA governor has announced a fourth consecutive 25 basis point hike in key interest rates to rein in historic inflation.
  • The easing of tensions between the US and China has supported investors’ risk appetite.

He AUD/USD is up close to 40 pips after the announcement, rising to a two-day high at the 0.6952 zone. At time of writing, the pair is trading above 0.6942, gaining 0.85% daily.

The Reserve Bank of Australia (RBA) has increased the Official Cash Rate (OCR) by 25 basis points (bp), as expected. The fourth consecutive 25 basis point interest rate hike by the RBA has put the OCR at 3.35%. This is the ninth consecutive rise in interest rates by RBA Governor Philip Lowe in order to control inflation.

The RBA had widely anticipated a hawkish interest rate policy as the Australian Consumer Price Index (CPI) posted a record rebound in the fourth quarter of 2022. Households in the Australian regions are bearing the brunt pressures on the cost of living in the absence of signs of a slowdown in global inflation figures.

Meanwhile, the easing of tensions between the US and China has brought some optimism for the Australian dollar. US President Joe Biden conveyed that the spy balloon incident does not weaken US-China relations. Apart from that, the faith of the Executive Director of the International Energy Agency (IEA), Fatih Birol, in the hopes of the Chinese economy, stating that “half of the growth in world oil demand this year will come from China “, has also instilled optimism in the Australian dollar.

It should be noted that Australia is one of China’s major trading partners, and rising hopes for an economic recovery in China are supporting the Australian dollar.

A rally in S&P 500 futures as investors shrugged off uncertainty about the Federal Reserve’s hawkish bets has weakened risk aversion. Improved risk appetite has also had an impact on the US Dollar Index (DXY), which has corrected to near 103.10. The yield generated by the 10-year US Treasury Bonds has fallen below 3.62%.

Later, Fed Chairman Jerome Powell’s speech will be the subject of much attention. The speech will provide clues about the likely behavior of monetary policy in the future.

AUD/USD Technical Levels

AUD/USD

Panorama
Last Price Today 0.6936
Today’s Daily Change 0.0051
Today’s Daily Change % 0.74
Today’s Daily Open 0.6885
Trends
20 Daily SMA 0.7002
SMA of 50 Daily 0.6856
SMA of 100 Daily 0.6672
SMA of 200 Daily 0.681
levels
Previous Daily High 0.6948
Minimum Previous Daily 0.6856
Previous Weekly High 0.7158
Previous Weekly Minimum 0.6919
Maximum Prior Monthly 0.7143
Minimum Prior Monthly 0.6688
Daily Fibonacci 38.2% 0.6891
Daily Fibonacci 61.8% 0.6913
Daily Pivot Point S1 0.6844
Daily Pivot Point S2 0.6803
Daily Pivot Point S3 0.6751
Daily Pivot Point R1 0.6937
Daily Pivot Point R2 0.6989
Daily Pivot Point R3 0.703
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Source: Fx Street

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