RBA’s surprise rate hike got traders buying AUD earlier today!
But can the comdoll maintain its gains against the yen?
Before moving on, ICYMI, yesterday’s watchlist looked at GBP/USD’s trend line support ahead of what could be a risk-friendly trading environment. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. ISM services PMI for May: 50.3 vs. 51.9 in April; Prices Index -3.4 to 56.2
U.S. factory orders grew by 0.4% m/m on strong defense spending, lower than the expected 0.8% uptick and March’s 0.6% increase
Apple unveiled Vision Pro Headset and updates to current products, AAPL closed just under all-time highs
Bitcoin drops after Binance, the biggest digital asset exchange in the world, was charged with mishandling funds and lying to regulators
ECB President Lagarde says “there is no clear evidence that underlying inflation has peaked,” hints at further tightening
BRC: U.K.’s retail sales slowed from 5.2% to a seven-month low of 3.7% in May as shoppers reduced non-essential spending amidst soaring food prices
Japan’s real wages dropped 3.0% y/y – its 13th consecutive monthly decrease – as spring wage negotiations disappointed and overtime pay weakened in April
Japan’s household spending fell by 4.4% y/y in April, marking the second consecutive monthly drop and the largest decline since February 2021, as consumers cut back on education and food spending amidst rising prices
RBA surprised markets with a 25bps rate hike to 4.10%, says “further tightening of monetary policy may be required”
Germany’s factory orders fell by 0.4% m/m in April, less than March’s upwardly revised 10.9% decline and the expected 2.2% decrease
Price Action News
One of the biggest stories during Asian session trading is the Reserve Bank of Australia (RBA) raising its interest rates by another 25 basis points to 4.10%. There were already murmurs of a rate hike but more than a few were sure the RBA would keep its rates steady.
The hawkish rate hike (the RBA also said that further rate hike may be required) sent AUD higher across the board.
As of writing, AUD has seen only limited pullbacks from its intraday highs.
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.K.’s construction PMI at 8:30 am GMT
Eurozone’s retail sales at 9:00 am GMT
Canada’s building permits at 12:30 pm GMT
Canada’s IVEY PMI at 2:00 pm GMT
RBA Gov. Lowe to give a speech at 11:20 pm GMT
Australia’s quarterly GDP at 1:30 am GMT
China’s trade data out during the Asian session (Jun 7)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
AUD/JPY: 15-min
AUD/JPY above this week’s range at the RBA’s rate hike announcement.
However, there were enough bears at the 93.15 area to force a pullback.
The pair is now trading closer to 92.75, which is just above the R1 (.92.63) of today’s Standard Pivot Points and coincides with half of AUD/JPY’s 94-pip daily volatility.
Interestingly, AUD/JPY’s current levels are also not far from the top of the range that the pair broke earlier today.
Are we looking at a break-and-retest situation in the making?
A long trade at the first signs of a bounce from R1 could work especially if you target AUD/JPY’s intraday highs above the 93.00 psychological handle.
If you’re not sure about AUD finding more buyers today, then you can also wait for an actual retest of the broken range resistance or a couple of green candlesticks confirming a bullish momentum before you place any long trades.
Good luck and good trading this one!
