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AUDUSD screams higher on RBA loss of patience and higher commodities

April 5, 2022 8:40 AM

The AUDUSD has surged to a 9-month high at .7639 (1.15%), following a more hawkish RBA meeting and a lift in the commodity complex overnight.

At its meeting this afternoon the RBA kept rates on hold at 0.1%, however it removed its dovish forward guidance.

The omission of the word “patient” and acknowledgement that inflation has picked up and a further increase is expected, is expected to see the RBA begin lifting interest rates in June, shortly after the Federal Election.

While most commentators feel the RBA cash rate will end the year at around 1%, the Australian interest rate is priced for the interest rate to be closer to 2% by year-end.

Also supporting the AUDUSD, mounting evidence of Russian war crimes in Ukraine has raised the likelihood oftighter Westernsanctions on Russian gas and oil, spurring the commodity complex higher overnight.

The RBA Index of Commodity prices is currently above where it was when the AUDUSD reached its 1.1081 high in May 2011.

Based on elevated prices for commodities, Australia's Terms of Trade at all-time highs, offshore investors' insatiable appetite for ASX200 listed Materials and Energy shares and a more hawkish RBA we remain bullish the AUDUSD in the medium term. A theme we first touched on in March here. 

After surging above October 2021, .7555 high we look for the AUDUSD to head towards the next upside target at .7700c with scope towards .80c in the medium term.

Source Tradingview. The figures stated are as of April 5th 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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