|

AUD/USD: Break above 0.72 highlights risk-on rotation – DBS

Philip Wee at DBS Group Research points out that the Australian Dollar (AUD) has been a key beneficiary of the risk-on shift. AUD/USD broke above 0.72 after the Reserve Bank of Australia (RBA) signalled a pause following three consecutive rate hikes. The report suggests markets may rotate into other high-beta pairs as investors seek carry and growth exposure.

Australian Dollar benefits from risk recovery

"The global currency market has exhibited a classic V-shaped sentiment shift over the US-Iran conflict that closed the Strait of Hormuz."

"Risk appetite returned, favouring commodity-linked and high-yield currencies, especially the AUD, KRW, and GBP."

"AUD/USD’s break above 0.72 yesterday was notable, especially after the Reserve Bank of Australia signalled a pause after its third consecutive rate hike on Tuesday."

"Markets may rotate to NZD/USD, which broke above its 0.5925 resistance, on expectations that the Reserve Bank of New Zealand will follow the RBA’s lead and hike before the Fed later this month."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD picks up bids above 0.7100 after RBA-speak

AUD/USD picks up bids above 0.7100 in the Asian session on Tuesday, following hawkish comments from RBA Assistant Governor Sarah Hunter and Governor Michele Bullock. However, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, which could limit the pair. The crucial Trump-Xi summit is later this week and remains in focus.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold recedes a tad; still above $4,300

Gold extends its decline for a second straight session, slipping below the $4,300 mark per troy ounce, just to regain some composure afterwards. The precious metal remains under pressure as expectations that the Fed will keep interest rates higher for longer continue to support US Treasury yields and the US Dollar.

Crypto Today: Bitcoin, Ethereum, XRP rally slows amid rising ETF inflows

The cryptocurrency market remains elevated on Tuesday, with Bitcoin trading around $85,798, nearly 49% above the year low of $57,756. Ethereum and Ripple trade within a robust bullish outlook above $2,700 and $1.51, respectively.

Energy and risk markets remain in the driver’s seat
US stock markets rallied up 2.26% (Nasdaq) yesterday with AI/tech names leading the advance. The Nasdaq even tested the all-time high reached early June. The likes of the S&P 500 and EuroStoxx50 recovered up to 1.5%. Positive risk vibes and lower energy prices supported consolidation on bond markets following the past month’s heavy losses. European yield curves bull steepened.
BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.