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