AUD rises as RBA meeting hints at further rate hikes
The Australian dollar has continued its bullish momentum of the last few days, aided by the latest Reserve Bank of Australia meeting minutes which show willingness to continue hiking interest rates as price pressures mount.
(Video Transcript)
RBA meeting minutes
Let's take a look now at the Reserve Bank of Australia (RBA) meeting minutes because they were released earlier this morning and they show that the bank's board members were actually considering hiking by 40 basis points at their prior meeting.
The RBA finally went for a 25 basis point hike to 0.35, arguing that this would make a return to normal operating procedures.
The minutes also revealed that the RBA policymakers agreed that further increases in interest rates would likely be required to ensure that inflation in Australia returns to the target over time.
AUD chart
Let's quickly have a look at how the Aussie dollar has performed.
This is the Aussie against a basket of currencies. You can see here the US dollar, the Japanese yen, the pound and the euro, and you can see overall we've seen some good momentum here from the Aussie dollar, pretty much turning here on Friday's session, seeing that strong rally there and also building those gains higher today out of those RBA minutes. So, we do have some good momentum here.
AUD/USD
Let's quickly pull up a chart of the Aussie against the US dollar to see how this specific currency pair has been performing.
As you can see, the Aussie dollar against the US dollar rose on the news. The markets saw it as a clear sign that the RBA would hike again at its next meeting. This will be June 7th, probably by 25 basis points again.
But this sets the tone there heading into that meeting that we do still have the RBA focused on controlling inflation and it's just going to be a case now of what this means for economic growth, for the economy.
But all-in-all, the way the Aussie dollar has been performing recently, especially against the US dollar, that has been the clear outperformer in the FX market recently.
We do see that momentum turning here on Thursday, heading higher on Friday, pushing now above once again that area of support. We were talking about this last week, that potential triple bottom here, expecting it to fall there on Monday 9th. Not quite managing, we fell below it and that was starting to diminish the power here of this triple bottom.
IF we do manage to close it once again and push up off it in the next few sessions, we could also start to consider this once again the turning point here for momentum.
But as it seems, the Aussie dollar recovering nicely on the back of those hawkish RBA minutes.
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