A risk-on mood surrounds the financial markets. Globalare registering gains, a consequence of China’s easing Covid-19 restrictions, and Caixin PMIs Services and Composite, which showed the world’s second-largest economy, appears to be founding a bottom despite slowing down.
Meanwhile, the US Dollar Index, a measurement of the greenback’s value, erases some earlier losses and remains to gain some 0.19%, sitting at 102.360, underpinned by elevated US Treasury yields. The 10-year benchmark note rate is at 3.025%, gains eight and a half bps, as investors assess the Federal Reserve’s pace of tightening.
The latter factor is the main reason for the AUD/USD fall. Despite the Reserve Bank of Australia 25 bps hike, widely expected on Tuesday, June 7, market players had already priced in the increase. However, don’t discount the chance of a 40 bps rate hike.RBA to hike by 40bps to address this. Average hourly earnings from the national accounts showed further gains in Q1 and points to an acceleration in wages growth which will pressure inflation higher.”
“With the economy on a stronger footing, we think the RBA can afford to take larger policy steps to tame inflation,” analysts noted.