Aussie Dollar May Extend RBA-Linked Gains as Risk Appetite Firms

The Australian Dollar soared against its major counterparts after the RBA appeared to settle back into wait-and-see mode following last month’s surprise interest rate cut. The central bank kept its baseline cash rate unchanged as expected at 1.75 percent following today’s policy meeting but the accompanying statement seemed to strike a less dovish tone than previously.

In the document, Governor Glenn Stevens argued that the existing policy stance is “consistent with sustainable growth in the economy and inflation returning to target over time,” pouring cold water on speculation about a sustained easing cycle. The Aussie rose alongside front-end bond yields, underscoring the anti-dovish perception of the RBA’s updated stance.

The British Pound mysteriously surged against all of its major counterparts. A clear-cut trigger was not readily apparent, with the newswires citing a so-called “fat finger” error on one of the major electronic platforms as the culprit. The erroneous quote allegedly triggered stop-lossesintraday, fueling a spike. Needless to say, it is nearly impossible to confirm the accuracy of such theories.

Looking ahead, a relatively quiet economic calendar in European and US trading hours is headlined by a revised set of first-quarter Eurozone GDP figures. News-flow out of the single-currency area has increasingly improved relative to consensus forecasts over the past three months, opening the door for an upside adjustment. Such a result may push back against global slowdown fears and boost risk appetite, offering a lift to commodity-bloc FX while punishing the anti-risk Japanese Yen.

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European Session

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