Australian Dollar Soars After Rate Hike
03 May 2022
AUD/USD is trading up 0.78% at 0.7102
The U.S. dollar edged lower in early European trade Tuesday ahead of the start of the latest Federal Reserve policy-setting meeting, while the Australian dollar soared after the Reserve Bank raised interest rates and signalled more to come.
At 2:55 AM ET (0655 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.623, holding below the 103.93 level seen late last week, the highest since December 2002.
The Fed will start its two-day consultation later this session, before handing down its policy decision on Wednesday. It’s widely expected to hike rates by 50 basis points, the biggest hike since 2000, while also announcing plans to trim its $9 trillion balance sheet.
However, the Fed isn’t the only major central bank meeting this week. The Reserve Bank of Australia started the ball rolling earlier Tuesday, raising its cash rate by 25 basis points to 0.35%.
The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time,” Governor Philip Lowe said in a post-meeting statement. “This will require a further lift in interest rates over the period ahead.”
AUD/USD surged as a result, climbing 1% to 0.7117, while GBP/USD rose 0.2% to 1.2510, with the Bank of England set to hand down its latest policy decision on Thursday.
On technical fronts AUD/USD RSI stood at 28.58 and currently it is trading below all MA. So, SELL position can be taken with following target and stoploss: