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MTrading Team • 2023-02-07

AUDUSD bulls return on RBA’s eighth rate hike and positive sentiment

AUDUSD bulls return on RBA’s eighth rate hike and positive sentiment

Risk appetite improved during a sluggish session of early Tuesday, following the mixed start of the week, as US policymakers ruled out recession woes. On the same line could be the receding fears of the US-China tussles over a balloon shooting. The mild optimism joins sluggish US Treasury yields to weigh on the US Dollar.

As a result, the risk-barometer AUDUSD pair leads the G10 gainers versus the US Dollar. Adding strength to the Aussie pair’s rebound is the RBA’s fourth rate hike worth 0.25%, a total eighth in a row.

The USDJPY is second to benefit from a softer US dollar and a retreat in the bond coupons while EURUSD and GBPUSD appear the most inactive as traders brace for key events.

Prices of Gold and Crude oil extend the previous day’s rebound while equities in the Asia-Pacific zone trade mixed amid downbeat Wall Street closing and mildly bid stock futures.

Cryptocurrencies recover as the softer US dollar joins the developed nations’ rush for digital currencies and hopes of more NFT transactions.

Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s rebound to $82.15, up 1.0% intraday at the latest.
  • Gold rises for the second consecutive day, up 0.45% near $1,875 by the press time.
  • USD Index retreats from one-month high, probing three-day uptrend near 103.50 as we write.
  • Wall Street closed with losses but the equities in the Asia-Pacific region traded mixed while those in Europe and the UK print mild gains.
  • BTCUSD snaps five-day downtrend near $23,000 but ETHUSD rises for the first day in three near $1,630.
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Upbeat mood joins RBA to propel AUDUSD

AUDUSD rises the most among the major currencies as market sentiment improved after the mixed start of the week. Among the key catalysts were US President Joe Biden and Treasury Secretary Janet Yellen’s rejection of recession concerns. US President Biden also turned down the odds of the fresh Sino-American tussles and offered additional help to the risk profile.

The same joins the RBA’s 0.25% rate hike and readiness to do more to propel the AUDUSD prices while USDJPY also drowned prints the first daily loss in three amid risk-on mood and softer US Treasury bond yields.

Elsewhere, US Dollar’s weakness enabled Gold and Crude to extend the bounce off monthly low while commodity-linked currencies managed to remain firmer with mild gains.

Equities are also on the positive side despite downbeat US stocks and mixed earnings while cryptocurrencies pare the latest losses amid industry-positive headlines and downbeat USD.

  • Strong buy: USDJPY
  • Strong sell: ETHUSD, GBPUSD
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Fed Chair Powell, Biden’s SOTU in focus

Although the risk profile appears positive during early Tuesday, the presence of a speech from Fed Chair Powell and US President Biden’s annual State of the Union (SOTU) statements will be crucial and may weigh on the sentiment. The same could recall the US Dollar buyers as the Fed hawks are back to the table after firmer US data. Elsewhere, German Industrial Production and multiple policymakers from the ECB and the BOE could also entertain market players moving forward.

May the trading luck be with you!