RBA hikes interest rate for the sixth consecutive month, leading to a nine-year-high
The Reserve Bank of Australia continued to hike rates for the sixth consecutive month, taking the cash rate to 2.60%, the highest level since 2013.
The Reserve Bank of Australia continued to hike rates for the sixth consecutive month by 25bps, pushing the cash rate to 2.60%, the highest level since 2013.
Since May 2022, Australia’s cash rate target has risen 2.25%, comparable to 1994 when interest rates rose 2.75% in five months.
In their official statement, the RBA reiterated its commitment to bring Australia's inflation rate back down with further increases. Phillip Lowe stated, “The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that."
Following Wall Street’s rally to kick off the new month, the Australian stock market also enjoyed the best day in three months on Tuesday. A gain of more than 2.5% has helped the ASX 200 to break through the steep descending trend line and escape the lowest point of the year.
Looking ahead, for the price to consolidate, the short-term bull-biased momentum, the level of 6574 will be a key level to watch. If an attempt to overcome this level fails, we could expect the price to retest the 6462 level. On the flip side, once the imminent hurdle is cleared, the door will be open for the ASX to touch the 20-day MA since mid-September.
AUD/USD has been hovering around the 0.6458 level as the 38.2% Fibonacci retracement area appears to be strong support. As the Relative Strength Index (RSI) is recovering from the oversold territory, the Aussie currency may stage further towards the next destination, where the 20-day MA sits, at around 0.66.
However, the July low at 0.6697 could limit the sky for such a rebound. In that case, the pair will resume the downtrend as another lower high will be painted.
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