RBA Takes Markets By Surprise With Rate Hike

The Australian Dollar (AUD) soared overnight during the Asian trading session after the Reserve Bank of Australia decided to hike the interest rates by 0.25% to 4.75% as a pre-emptive move to contain inflationary pressures. The hike came as a big surprise to the markets as most of the analysts were expecting the RBA to hold the rates unchanged especially after the consumer price index came out lower for last period. As a result the Australian Dollar, which was already on a multi-month rally especially against the US Dollar (USD), jumped against its major counterparts. The AUD/USD broke through the parity level, reaching as high as 1.0023, the highest level since 1983. The currency pair currently holds above the parity trading at 1.0010s. The Australian currency rallied against the other currencies as well, namely the Euro (EUR), Japanese Yen (JPY) and the Canadian Dollar (CAD). The EUR/AUD dropped from 1.4065 to 1.3924 before recovering above 1.4, where it currently trades. The AUD/JPY jumped from 79.65 to 81, while the AUD/CAD traded as high as 1.0120.