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RBA raises rates, AUD/USD soars
Surprise in Australia. At today's meeting, the RBA unexpectedly tightened monetary policy to ensure inflation returns to target. The AUD/USD exchange rate reacted strongly to this.
Reserve Bank of Australia (RBA) surprised everyone and increased interest rates In Australia. Following this decision, the key rate increased by 25 basis points to 4,10 percent. This is the fourth increase in the cost of money this year and the 4th increase since May 12, when the RBA began to raise rates.
The RBA's decision took everyone by surprise. The market expected the main rate to remain at the current level of 3,85 percent. And that was it second such surprise. The first was in May, when the RBA raised rates to 3,85 percent. from 3,60 percent, while this increase was not forecast by economists and analysts.
Fear of inflation is at the root of today's RBA decision. Although the bank points out that Australian inflation has passed its peak and now it will fall, but it is still too high, which may be worrying given the tight labor market. Today's tightening of monetary policy is to increase the certainty of its future return to the inflation target.
The Australian dollar reacted strengthening to this surprising decision of the central bank. Including to the US dollar. AUD / USD exchange rate shot up to 0,6673 from 0,6626 just before the decision.
AUD/USD daily chart. Source: Tickmill
The rise of AUD/USD to 0,6673, if finally "delivered" by the end of the day, will be the final confirmation of the importance of last week's upward move on the chart of this pair from levels below 0,65. Another one, because earlier it was preceded by a return above the March lows.
The daily chart also breached the 50-day average today and is heading towards the 200-day average. The main resistance now is the line connecting the peaks from February and May this year. It is located at 0,6720. Its breaking will open the way to the 0,6818-0,6830 resistance zone, which at the moment seems to be the main goal for the demand side.
