Headlines:
- RBA raises cash rate by 25 bps to 0.35%
- A cheeky move by the RBA helps to lift the aussie
- RBA's Lowe: Expects that further rate hikes will be necessary in the months ahead
- RBA's Lowe: A more normal level of rates would be 2.50%
- Offshore yuan tumbles further, nears 6.70 against the dollar
- Germany April unemployment change -13k vs -15k expected
- Eurozone March PPI +5.3% vs 4.9% m/m expected
Markets:
- AUD leads, USD lags on the day
- European equities slightly higher; S&P 500 futures down 0.1%
- US 10-year yields down 3.5 bps to 2.959%
- Gold flat at $1,863
- WTI crude down 1.2% to $103.90
- Bitcoin up 0.7% to $38,569
The day started with the RBA lifting its cash rate in a cheeky move, hiking by 25 bps to 0.35%. That gave the aussie a slight boost from 0.7090 to 0.7147 before those gains were largely pared back as the dollar steadied.
The Australian central bank paved the way for tighter policy and more rate hikes in the months ahead, though market pricing has already accounted for most of that at this stage.
Elsewhere, bond yields inched higher early on with 10-year Treasury yields hitting 3% and 10-year German bund yields hitting 1% for the first time since 2015. That helped with the dollar before the mood is slightly tempered with now as yields come down a little.
EUR/USD lingered around 1.0500 before pushing up to 1.0550 now ahead of North America trading with USD/JPY mostly hanging around 130.00-10 before easing to 129.90 at the moment.
AUD/USD saw its early rise fall back from 0.7147 to 0.7090 but is now up 1% on the day again to 0.7110-20 levels.
All in all, it is mostly still some pushing and pulling ahead of the Fed meeting tomorrow. That will be the key test for markets and will set the tone for the remainder of the week.
