- AUD/USD: RBA's hawkish turn may not prove enough to materially lift the aussie – ING
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AUD/USD: RBA's hawkish turn may not prove enough to materially lift the aussie – ING
The Reserve Bank of Australia (RBA) has hiked rates by 25bp taking the cash rate target to 0.35%. The aussie jumped after the statement. However, economists at ING expect AUD/USD to struggle at the 0.72/73 zone in the coming weeks.
RBA hikes 25bp
“The RBA sent a firmly hawkish signal as it hiked rates by 25bp (to 0.35%) and announced it would stop reinvesting maturing assets, therefore allowing its balance sheet to shrink over the coming quarters.”
The AUD rally has proven relatively short-lived, which is not entirely surprising given that: a) markets were already pricing in a cash rate of 2.60% by year-end (they now expect 2.80% after the hike); b) lingering concerns on China’s Covid crisis are weighing on the Antipodeans.
“The upside for AUD/USD may still be limited to the 0.72/0.73 area in the coming weeks.”
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