RBA Raises Again

In line with the majority of market soothsayers, the RBA continued its campaign of raising interest rates last night. I had a change of heart concerning whether a long side try was viable after the morning data and initiated around .8990. Trading isn't easy though and the news was sold down 40 pips or so while the crowded trade had some running for the exits when a move higher didn't take place. The downside scenario didn't play out over night and AUD rallied back above .9000 to peak around .9050 around 745am this morning. I cleared my book on a pullback around .9040 and look to enter another trade when/if a high probability opportunity presents itself.

The RBA telegraphed to expect more rate hikes this year saying ''The (RBA) Board judges that with growth likely to be close to trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average. Today's decision is a further step in that process.'' Many expect to see rates around 5% a year from now. From where I sit, most of risk is to the downside unless Asia is going to continue to pull Australia around regardless of what happens to the rest of the G20. You won't see me making any bets on that though. That economy has been know to put some out for a stroll.