RBA

This morning saw the release of the RBA’s May meeting minutes. The market was hoping for clues on the likely size of next month’s rate hike, particularly after the bank caught all commentators on the wrong foot last month by raising rates by 25bp to 0.35%.

The RBA’s surprise hike caught AUD/NZD traders with their guard down. As a result, the pair traded to its highest level since August 2018.

For the first time since November 2010, the RBA has raised interest rates today, from a record low of 0.1% to 0.35%.

In a preview earlier this week, we noted that a firm Q1 Australian inflation print would likely confirm the end of the era of ultra-low interest rates in Australia and the possibility of an interest rate hike as early as next week.

This morning's release of March quarter Australian inflation data smashed already elevated expectations. The stunning beat firms up the chances that the RBA will raise interest rates at its monthly board meeting next week for the first time since 2010.

The AUDUSD has surged to a 9-month high at .7639 (1.15%), following a more hawkish RBA meeting and a lift in the commodity complex overnight.

Whether RBA will surprise us with a vaguely interesting meeting today or not is yet to be seen, but the fact that the Aussie sits at a pivotal level should be noted.

While this week's focus will remain on the awful humanitarian news from the Russia-Ukraine war, markets will do their best to anticipate the path central banks will tread as they negotiate a treacherous mix of higher inflation and downside risks to growth.

At its last scheduled monetary policy meeting for 2021, the RBA tomorrow will likely keep interest rates on hold at 0.1% and reiterate that interest rates are unlikely to rise until inflation is sustainably back within its target band.

Wrapping up a massive week for antipodean markets, the RBA’s Quarterly Statement of Monetary Policy (SoMP) that contains the RBA’s key forecasts is released tomorrow.

The Australian dollar was broadly weaker overnight as hawkish bets were underwhelmed with the RBA’s patient approach to policy tightening.

After implementing a series of five easing measures at its board meeting in November last year, the RBA has today taken another step towards normalising its emergency monetary policy settings.

Earnings continued to exceed expectations and propelled indices to new record highs, despite supply chain issues weighing on US productivity.

This time last year, ahead of the 2020 Melbourne Cup, speculation centered on what measures the RBA would take to bolster the economic recovery.

Over the last 3 days the pair held resistance and moved lower, helped on Monday by a surge in Q3 inflation from New Zealand

As widely expected, at its monthly board meeting this afternoon, the RBA kept monetary policy on hold, including its targets of 10 basis points for the cash rate and the yield on the April 2024 Australian Government bond.

An extremely dovish RBA has seen net-short exposure on the Aussie hit a new record. Yet the move lacks conviction as we continue to see both long and short bets decline.