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Aussie Strengthens Sharply Ahead of RBA’s Cash Rate Decision, 50+ PIP Volatility Likely in AUD Parity; May 03, 2022

Australia’s Cash Rate Decision

Today Australia will release Cash Rate Decision at 0430 GMT/1000 IST. The rate decision is usually priced into the market, so it tends to be overshadowed by the RBA Rate Statement, which is focused on the future. Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions.

Today RBA is likely to raise interest rate for the first time since 2010. In addition, yields on benchmark 10 – year government notes jumped 11 basis points to 3.24%, the highest since November 2014. According to the Andrew Ticehurst, a rates strategist in Sydney at Nomura Holdings Inc, “Australian bonds have under-performed to reflect the market’s confidence that the RBA will now deliver its first hike of the cycle this week”. As we have noticed that bonds are sinking worldwide this year as major Central banks move to aggressively tighten policy to control elevated inflation. Investors are now focusing on the RBA’s next move along with the updated GDP, CPI and Employment targets to achieve in near future.

Let’s see how AUD has reacted during the previous data release:

April 05:

March 01:

Technical View:

AUD/USD:

  • The Aussie starts a new day on a positive note and hovers around $0.7100 mark.
  • Today pair made intraday high at $0.7099 and low at $0.7045 mark.
  • A day chart and H1 chart with triple EMA suggest bearish trend for the time being.
  • A sustained close above $0.7115 on H1 chart requires for the upside rally.
  • Alternatively, a consistent close below $0.7030 will check further supports.
Support
Resistance
$0.7030
$0.7115
$0.7001
$0.7140
$0.6976
$0.7172
$0.6948
$0.7199

 
Take a look and do trade wisely!
Good Luck

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