Australian dollar post-RBA boost may continue as uranium prices surge

Wednesday’s Asia-Pacific outlook

The Australian dollar paced higher against the US dollar through the New York trading session overnight, benefiting from Tuesday’s Reserve Bank of Australia (RBA) rate decision. A rosy session on Wall Street helped support the risk-sensitive currency as the dollar fell against most of its peers. The Japanese Yen, however, continued to deteriorate, with USD/JPY hitting a fresh multi-decade high.

Australian bond yields rose following the RBA’s surprise decision as traders ditched bond holdings in preparation for further rate hikes this year. Analysts moved quickly to price in more aggressive rate hike bets for the July RBA meeting. The higher trajectory has some economists concerned that it may trigger a recession as households grapple with high debt levels.

Spot uranium prices rose on news that the United States may see a government-led initiative to bolster the country’s uranium supply and industry. Australia, being a large exporter of uranium, may benefit from the higher prices. If the US follows through and creates a stockpile of uranium, it would likely tighten global supply. Brazil recently loosened restrictions around uranium mining, also responding to the impacts of the war in Ukraine.

A global recession remains a notable question mark hanging over markets, something that is likely to temper sentiment through the remainder of the year as central banks tighten down on prices. A report released by the World Bank signaled a worrying concern over a global recession. The report showed that world growth is expected to cool this year to 2.9%. That is well below what the IMF forecasted earlier this year. Growth-sensitive oil prices rose despite the grim report. The American Petroleum Institute (API) reported a build in US crude inventory levels, which also failed to cool WTI prices.

This morning, Japan’s final first-quarter GDP growth numbers will cross the wires. Japan’s monetary policymakers have been hesitant to join its peer institutions in normalizing policy amid lagging inflation and wages. Later today, Australia will see a business confidence update for May from the NAB, along with the RBA chart pack. The Reserve Bank of India (RBI) is expected to increase its benchmark rate by 40-basis points. USD/INR may fall on the decision’s delivery, especially if the RBI takes a cue from the RBA and delivers a jumbo hike.

AUD/USD technical forecast

AUD/USD is attempting to break above the pseudo-50% Fibonacci retracement level, which sits directly below the May swing high. If prices break above those levels of resistance, more upside may follow. The MACD oscillator crossed above its centerline, aiding the case for higher prices. Alternatively, a drop would put the 38.2% Fib level on the defense.

AUD/USD daily chart

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products.

The material on this page does not contain a record of IG’s trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.