Dovish RBA hike frustrates AUD bulls – SocGen
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RBA raises the cash rate target (CRT) by 25 bps to 3.60% but hints at a pause as early as next meeting. The AUD enjoyed a terrific start to 2023, but enthusiasm has died down, economists at Société Générale report.
“The RBA did not surprise and raised the CRT by 25 bps to 3.60%, as widely expected. The statement reiterated that further tightening will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary. However, it also acknowledged that inflation has probably peaked and hinted at possible pause as soon as April.”
“Our economists maintain their view for a peak at 3.85% in April, below the 4.05% implied by futures.”
“AUD/USD is close to graphical support of 0.6680/0.6660 representing low of January and the 50% retracement from last October. An initial bounce is expected however 200-DMA and neckline of the formation at 0.6800/0.6850 could cap upside. Next potential support is at target of the pattern near 0.6550.”
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