May 04, 2022 - 03:16 PM 262 views
The Reserve Bank of Australia's (RBA) shock hike to
a 25 basis point (bps) rate has steered Australia to bigger levels. Moreover,
by considering the opinions of ING economists, the AUD/USD pair's upward
movements are limited despite the RBA’s hawkish raise.
Markets now expect 270 basis points of tightening
by the close of the year.
Whereas the RBA has given
some indications that it is now dedicated to a period of raising interest rates
to combat inflation, the markets are currently trading at 270 basis points (bps)
of tightening by the close of the year, which may be too aggressive.
For the time being, we
believe that the AUD/USD will remain capped in the 0.72-0.73 range in the
following weeks due to the external environment that is still adversely
impacted by China's clouded outlook.