- RBA with another 25 bp rate hike
- Peak of inflation is behind but it is still to high
- Labor market has eased but remains very strong
- AUD bounce from support leven and back to the previous consolidation range
The Reserve Bank of Australia (RBA) increased its cash rate (OCR) by another 25bp to a 13-year high of 4.1%. The decision was taken as Australia's inflation, although past its peak, is still high at 7%. The labor market has eased slightly, but remains very tight with job vacancies and advertisements at high levels. Wage growth is consistent with the inflation target, assuming productivity growth increases. The RBA also highlighted that achieving a soft landing will be a challenge and further monetary policy tightening may be required due to higher interest rates and cost-of-living pressures causing significant slowdown in household spending.
Following the RBA's decision, the Australian dollar surged, pushing AUDUSD to a three-week high. This rate hike also caused the ASX 200 index (AUS200) to lose all of the previous day's gains and fall back below 7200, as investors realized that the peak rate might not be as near as previously expected.
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Last week, AUDUSD key support at 0.6509 held strong on the hourly chart, despite attempts from sellers to breach it. Now, buyers are in force with price approaching to a significant resistance level near 0.6700.
