Heading into today’s European trading session, the risk tone is mixed. Asia-Pacific indices are mixed, measures of volatility are elevated and safe-havens mixed.
Leading Asia-Pacific indices to the upside is the Topix at +0.41%, followed by the CSI 300 at +0.21% and the Nikkei 225 at +0.10%. The Hang Seng and ASX 200 are both negative on the session at -0.45% and -1.53%, respectively.
In the FX complex, the dominant focus has surrounded AUD following the RBA’s latest policy announcement. The central bank surprised markets by announcing a 50 basis point rate hike versus a 25 basis point rate hike consensus. Additionally, the RBA stated that inflation was running hotter than thought just a month ago, and further hikes would be needed to normalise policy.
Despite a clearly hawkish meeting from the RBA, AUD was unable to maintain its initial momentum and hold onto its gains. Reuters notes that AUDUSD quickly ran into profit taking, with dealers reporting “stiff resistance at the 200-day moving average.”
Looking ahead, the rest of today’s economic calendar is light on tier one data, keeping the market’s focus fixed on the RBA alongside broader market themes such as the prevailing risk tone and comparative monetary policy and economic outlooks.
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