AUD/USD, ASX 200 Analysis: The Aussie remains buoyant ahead of Lowe, AU GDP

Market summary

The RBA delivered another 25bp hike (their 12th this cycle) to take their cash rate to 4.1%
Whilst the RBA suspect that ‘inflation has passed its peak’ it remains ‘too high’ and some further tightening may be required
AUD pairs were broadly higher, the Aussie was the strongest FX major, AUD/JPY closed to a fresh YTD high and the ASX 200 erased all of Mondays gains
The Canadian dollar was given a lift following the RBA’s hike, as it slightly increases the odds of a BOC hike tonight or hawkish tone (they have paused the last two meetings and we suspect they will hold again today)
Oil prices have done full circle, having filled Monday’s gap higher, pulled back towards $70 yesterday’s before rising back to Friday’s close (making it a directionless, tricky market to trade for now)
Wall Street was slightly higher but volatility was low for the S&P 500, Nasdaq and Dow Jones
Apple shares were a touch lower following Monday’s key reversal
The world bank increased global growth forecasts for 2023 but downgraded them fore 2024

Events in focus (AEDT):

09:20 – Speech by Philip Lowe, Governor – A Narrow Path
09:50 - Panel Participation by Michele Bullock, Deputy Governor
11:30 – Australian GDP report
13:00 – China trade data
00:00 - BOC cash rate decision (hold expected)

ASX 200 at a glance:

A bearish engulfing day formed due to the RBA hike
10 of its 11 sectors closed lower, led by consumer discretionary and industrial
Intraday support: 7127, 7110.8, 7100 and 7077
Intraday resistance: 7161.5, 7185.8

AUD/USD 1-hour chart:

AUD/USD posted a strong rally immediately following the RBA’s hike, prices have since pulled back into the VPOC support zone and are now trying to break to a new cycle high. A bullish pinbar formed at the end of the NY close so perhaps it can break above the weekly R1 pivot and continue higher towards 0.6700 / 1.67100, and the upper ADR band near the weekly R2 pivot. A break beneath the bullish trendline assumes a retracement against the June rally is underway.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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