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MTrading Team • 2022-12-06

AUDUSD bulls cheer RBA’s hawkish rate lift, risk-on mood amid sluggish session

AUDUSD bulls cheer RBA’s hawkish rate lift, risk-on mood amid sluggish session

Global markets remain positive during early Tuesday among chatters that China will ease the Zero-Covid policy after three years. In addition to the firmer sentiment, the Reserve Bank of Australia’s (RBA) 0.25% rate hike and readiness for more increases in rates allowed the risk-barometer AUDUSD to remain firmer.

US Dollar, on the other hand, struggles to extend the week-start gains, mainly backed by stronger data and hawkish hopes from the Fed.

Prices of gold and crude oil pare recent losses but fail to get upside momentum amid a light calendar and a lack of Fed talks.

BTCUSD and ETHUSD stay pressured as system fears jostle with the softer US dollar.

Following are the latest moves of the key assets:

  • Brent oil remains pressured near $83.50, after the downbeat Monday.
  • Gold snaps two-day downtrend but struggles to recover much beyond $1,770.
  • USD Index stays defensive above 105.00 following an upbeat start of the week.
  • Wall Street closed on the negative side but stocks in Europe and the UK remain mildly offered amid the latest optimism.
  • BTCUSD struggles to defend $17,000 threshold whereas ETHUSD prints mild gains near $1,260.
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Cautious optimism prevails

Although the recently firmer US NFP and ISM Services PMI renewed fears of aggressive Fed rate hikes, downbeat inflation expectations and the pre-FOMC blackout allows market players to remain hopeful of late. On the same line are the talks of China’s gradual easing of the virus-led activity controls, as well as hopes for faster recovery of the world’s second-largest economy.

The risk-on mood joined the RBA’s rate hike and readiness for more such measures to tame the strong inflation to propel the AUDUSD prices. However, fears that the Aussie economy is yet to witness negative impacts of the latest rate lifts challenge the pair bulls.

On the other hand, gold and crude oil also struggle to cheer the US dollar’s weakness amid uncertainty surrounding the major central banks’ next moves and a rebound in the US Treasury bond yields. Further, equities outside China remain sluggish whereas USDJPY stays indecisive as BOJ officials hint at policy tightening.

In the case of cryptocurrencies, the slowdown in the network usage of Ether and US Federal Trade Commission’s (FTC) probing of multiple entities challenge the BTCUSD and ETHUSD prices.

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

Nothing major ahead

A light calendar and absence of Fed talks put traders at the mercy of risk catalysts. As a result, headlines surrounding China and Russia appear more important while the US inflation expectations and movements of equities should be eyed closely for clear directions.

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