Kaboom! The Reserve Bank of Australia dropped another surprise bomb on the markets yesterday when it unexpectedly increased its interest rates. This rocketed AUD/USD to an intraday high of 1.0024, a high not seen since the Aussie dollar was floated in 1983. Heck, that was back when Mark Hamill was struttin’ his stuff as Luke Skywalker in Star Wars: Episode VI - Return of the Jedi!
As Forex Gump mentioned in his latest blog, the RBA hiked rates to prepare for more inflationary pressures. You see, even with a strong currency and last quarter’s weaker-than-expected CPI reading, the RBA believes that there will be enough growth in public spending, private lending, and export demand in the near future to merit another interest rate hike.
Of course, it didn’t hurt the Aussie that the AIG services index for October also surpassed its 45.6 September figure by printing at 50.7. This supported the RBA’s declarations of robust economic growth, and attracted more currency bulls to the Aussie despite its record-high figures.
The building approvals report released a few School of Pipsology pageviews ago is the only report scheduled for today. The data dropped by 6.6% in September, which was a lot lower than the estimated 0.3% rise. Will this affect Aussie trading today?
Good luck in your trades today, kiddos!