Equities Trade Mixed Ahead of Fed, RBA Hikes by More Than Expected

EU shares Slide, Wall Street Gains as Attention Turns to Tomorrow’s FOMC Decision

The US dollar traded mixed against the other major currencies on Monday and during the Asian session Tuesday. It gained versus CHF, GBP, and EUR in that order, while it underperformed against AUD, NZD, JPY, and CAD.

Nasdaq 100 — Technical Outlook

The Nasdaq 100 cash index traded higher yesterday, after it hit support near the 12720 zone. Although the index moved back above the 13045 barrier, it stays below the downside resistance line drawn from the high of April 5th. Thus, we still see a negative short-term outlook.

RBA Surprises Markets and Hikes by More Than Anticipated

Today, during the Asian morning, we already had a major central bank deciding on interest rates and this was the RBA. The Bank decided to hike by 25bps, to 0.35% from 0.10%, surprising the financial community, which was expecting a 15bps increase, and sending the Aussie higher against every other of its major peers. The Bank committed to doing what is necessary to ensure that inflation returns to target over time, and explicitly said that this will require a further lift in interest rate over the period ahead.

AUD/USD — Technical Outlook

AUD/USD traded higher in the aftermath of the RBA decision, after hitting support at 0.7030. However, the price structure on the 4-hour chart still points to a downtrend below the downside line drawn from the high of April 5th. Therefore, we will consider the short-term outlook to still be negative, even if the current recovery continues for a while more.

As for the Rest of Today’s Event

The only data releases worth mentioning for the rest of Tuesday are the German unemployment rate for April, the UK’s final manufacturing PMI for the same month, and the US’s JOLTs job openings for March.

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