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AUD/USD – Remains rangebound despite RBA interest rate hike

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  • RBA hikes and signals it’s now data-dependent
  • Inflation remains a challenge despite already high rates
  • AUDUSD fails to breakout but momentum remains

The RBA today ended a series of four rate pauses and hiked by another 25 basis points.

The fact that it’s needed to hike again after such a long time highlights how difficult central banks are finding it to get inflation under control and how much more difficult this last stage may prove than hoped.

The RBA may now refrain from warning about further hikes going forward but it will certainly leave the door ajar as it can no longer be confident that inflation won’t stubbornly remain above target. As we’ve heard so much, the RBA is data-dependent, and future moves will be guided by it.

AUSUSD fails to break the top of the sideways channel

A rate hike is often viewed as being bullish for a currency but today’s had been speculated about for some time and it seems the lack of commitment to more in the language that accompanied it instead weighed on the Aussie dollar.

AUDUSD Daily

Source – OANDA on Trading View

That leaves the pair in the sideways channel it’s traded within for the last few months and there’s no clear signal that we could see a breakout any time soon.

The move to the top of the channel looked quite powerful but just as quickly and forcefully it turned lower. The momentum indicators still appear quite positive despite today’s moves and if price turns higher again, they may be the giveaway as to whether we’ll see another attempt to break above the channel.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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