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AUD soars on future interest rate guidance

Tuesday 5 April, 2022

Daily Currency Update

There was little macroeconomic data for the GBP, USD, and EUR to take direction from on Monday. Market participants kept a close eye on the latest headlines from Russia and Ukraine, and more specifically the latest round of sanctions due to be imposed on Russia. European countries could expel Russian diplomats and place a ban on importing gas and oil. GBP/USD has traded within a very narrow range in the past 24 hours (1.3095 – 1.3040) and the EUR has lost further ground against both the GBP and USD. Sterling has touch 1.1970 overnight against the euro and EUR/USD has fallen back below 1.1000, touching 1.0960 earlier this morning. The EUR has been the harder hit of these major currencies due to the EU’s reliance on Russian gas and oil.

Key Movers

The Reserve Bank of Australia announced overnight that there will be no change to their interest rate, currently sitting at 0.10%. RBA governor Philip Lowe followed the announcement stating that the Board has wanted to see actual evidence that inflation is sustainably within the 2 to 3 percent target range before it increases interest rates. Inflation has picked up and a further increase is expected. This announcement sent the Australian dollar higher as analysts have now started to predict that an interest rate rise could be seen by August, with some expecting the first interest rate increase in June, and a few even suggesting it could happen next month. AUD/USD jumped from 0.7538 up to 0.7640 on the news and GBP/AUD dropped from 1.7400 down to around 1.7190 at the lows.

Expected Ranges

  • GBP/USD: 1.3090 - 1.3150 ▼
  • GBP/EUR: 1.1890 - 1.2020 ▲
  • GBP/AUD: 1.7030 - 1.7190 ▼
  • EUR/USD: 1.0940 - 1.1020 ▲