The Aussie dollar roared through a number of resistance points overnight, rising more than 2% after the RBA surprised traders and the market yesterday by sounding much more hawkish than expected in the governor’s statement after the board meeting.
Certainly they left rates at 2.5% and certainly they discounted the uptick in inflation that occurred in the December quarter in 2013 – so rates aren’t rising anytime soon. But their more upbeat tone has a number of forecasters looking for rates to rise as soon as this year.
So the Aussie dollar sits this morning around the 0.8940, more than 200 points off yesterday’s low.
The Governor noted in his statement yesterday that if the Aussie dollar’s fall was sustained it would help “in achieving balanced growth in the economy”.
The Quarterly Statement on Monetary Policy is out on Friday – it will be interesting to see what the RBA says about the Aussie dollar then.
Greg McKenna is an active currency trader who ignored his systems and thought he knew better than the market yesterday and sold Aussie dollars.