Australia’s Interest Rate has been raised by about 50bps to 1.35% during the Reserve Bank’s July meeting. The board concluded that monetary support will be tightened with the size being guided by the upcoming data as of the strength of the economy and current inflation pressures which stands around 5.1%.

The Australian dollar decreased against the dollar by about 0.9% and trades around $0.68. The AUD/USD rate came under pressure as the central bank refused to offer a more hawkish forward guidance. The board seemingly only debated a 50bps or 25bps hike and not a 75bps rise as speculated. Additionally, the Aussie getting pressured by the aggressive monetary plan by the U.S Federal Reserve and the risk of recession which both support the dollar.

However, the interest rate hike still might be bullish for the currency. The rate testing the swing lows for absorption for Aussie longs and dollar shorts. The lower and prior DVAL close level may serve as support in today’s session in case of a drop lower while the day’s lower value extreme eventually serves as a resistance area. 

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Asset Managers were quite mixed in the latest COT report with long liquidations and short coverings while the leveraged funds got some fresh long and short positions. Both sectors are net selling the Australian dollar while the funds slightly eased upwards.   

Production data increased but slightly eased to the prior data releases which might be viewed as bearish. Mining production in Australia decreased by 3.08 percent which is also a selling factor for the moment. Copper is down by about 2.5% in today’s early trading session which pressures additionally.

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