Rate decision from the Reserve Bank of Australia was the highlight of today's Asia-Pacific session. Central bank was expected to keep rates unchanged for the fourth meeting in a row, with official cash rate seen staying at a 12-year high of 4.35%. Markets were hoping that RBA may change wording of policy statement to highlight that hikes are more likely than cuts given recent hawkish surprises in inflation data and still-strong data from Australian job market. Nevertheless, no such hawkish shift was offered and AUD weakened following the decision.
However, RBA Governor Bullock acknowledged during the post-meeting press conference that the Board discusses the option of raising interest rates at the meeting and said that while RBA might have to raise rates again, it doesn't mean that it has to. Bullock said that the right stance at the moment is to keep policy where it is now and observe the economy. While central banker noted that RBA needs to be vigilant on inflation risks, she also said that she doesn't think more tightening will be necessarily. Overall, lack of change in statement wording as well as comments from RBA Governor Bullock sounded somewhat dovish and a pullback in AUD today looks justified.
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Open account Try demo Download mobile app Download mobile appAUD is the worst performing G10 currency today. Taking a look at EURAUD chart at D1 interval, we can see that the pair is bouncing off the 1.6225 support zone today. Pair recovers from a 4-month low and the first near-term resistance zone to watch, should the rebound continue, can be found in the 1.6450 area.
Source: xStation5
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