The Reserve Bank of Australia unexpectedly raised rates Tuesday 25 points to 3.85% after maintaining it at 3.6% in April, the 11th time the RBA has raised in the past year. This was motivated by the RBA’s worry of inflation which is currently 7.0%, way too high with the labour market remaining tight. The Australian Dollar (AUD) rose to 0.6715 post the release before tapering off back to 0.6640 over the following hours. The Fed also raised their interest rate to 5.25% from 5.0%, the Fed saying this ‘maybe it’ after a long run of hikes. Markets are still pricing an 85% chance that the Fed will start cutting rates by year end despite the ongoing rhetoric by the Fed. We are not sure the Aussie will carry this momentum into next week with Non- Farm Payroll releasing tomorrow morning.
The current interbank midrate is: AUDUSD 0.6990
The interbank range this week has been: AUDUSD 0.6608- 0.6716