Forex Market: AUD/USD rebounds further from 30-month low after RBA Deputy Governor Bullock’s hawkish remarks

AUD/USD extended a rebound from last week’s 30-month trough on Tuesday, after Reserve Bank of Australia’s Deputy Governor Michele Bullock said the central bank would raise interest rates further during the upcoming months and it could keep up with the tightening cycle of its peers across the globe with more frequent, smaller rate increases.

Meanwhile, the minutes of RBA’s October policy meeting showed the Board had opted to slow the pace of rate hikes due to rising risks to households.

“The board noted rates had already risen by 250 basis points since May and much of that had yet to feed through into mortgage payments. The tightening had also hit home prices and household wealth and could cool consumption over time,” the Minutes stated.

Still, Australia’s current inflation remains too high and policy makers said they expected it to reach 7.75% by the end of the year.

RBA’s Deputy Governor Michele Bullock also stressed on concerns over household spending in light of successive interest rate hikes and amid a deteriorating global macroeconomic environment.

As of 8:51 GMT on Tuesday AUD/USD was inching up 0.03% to trade at 0.6290. Last week, the major Forex pair went down as low as 0.6170, which has been its weakest level since April 8th 2020 (0.6115).

Bond Yield Spread

The spread between 2-year Australian and 2-year US bond yields, which reflects the flow of funds in a short term, equaled -109.8 basis points as of 8:15 GMT on Tuesday, down from -105.0 basis points on October 17th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.6268
R1 – 0.6333
R2 – 0.6377
R3 – 0.6442
R4 – 0.6507

S1 – 0.6223
S2 – 0.6158
S3 – 0.6114
S4 – 0.6070