Aussie Hits Four-Year Peak After RBA Rate Hike
The AUD/USD pair strengthened above $0.72 and reached a four-year high after the Reserve Bank of Australia (RBA) raised its benchmark interest rate by 25 basis points to 4.35%, as expected. The strengthening was also supported by improving risk appetite, along with emerging signs of a de-escalation in the Middle East conflict.
The RBA's decision was made by an 8-1 vote, marking the third consecutive hike. The central bank emphasized its focus on bringing inflation back to its 2-3% target, making its policy stance appear more hawkish than the split vote at its March meeting. However, the RBA also assessed that current policy was "well placed to respond to developments," which the market interpreted as a signal that a pause was beginning to open.
Based on market expectations, the probability of another hike in June was said to be only around 20%. However, the market is still pricing in the possibility of a further hike to 4.60% in September, so AUD movements remain sensitive to changes in perceptions of the next interest rate path.
Beyond domestic factors, global risk sentiment also improved following optimism that a deal with Tehran could be reached. The US declared its offensive operations against Iran had ended, reaffirmed a ceasefire, and temporarily halted efforts to help stranded vessels exit the Strait of Hormuz, giving markets room to reassess near-term geopolitical risks. (asd)
Source: Newsmaker.id
