The Reserve Bank of Australia (RBA) raised its key rate by 25 basis points (bps). The AUD/USD weakened following the dovish surprise. Analysts at Commerzbank expect the pair to struggle to gain some ground.

RBA does not deliver

“The RBA only hiked its key rate by 25 bps. However, the decision did not come as a complete surprise as the RBA had sounded more dovish recently thus preparing the market for the possibility of a reduction in the speed of the rate hikes.”

“AUD came under depreciation pressure, but the move was quite moderate. Moreover, the RBA has demonstrated its willingness to tighten monetary policy further. That means the end of the rate hike cycle does not yet seem to have been reached.”

“With a view to today’s RBA decision AUD is likely to struggle making ground against USD again though, in particular while the US central bank sticks to its hawkish rhetoric. As a result, we currently see little upside scope in AUD.”