After RBA’s decision, AUD/USD sinks on risk aversion

The AUD/USD pair fell more than 100-pips during the day and probed the YTD low around 0.6763. The Australian dollar followed its fellow peers and is tanking to fresh two-year-lows amidst renewed concerns of a recession looming worldwide, amidst a high inflation scenario, bolstering the appetite for safe-haven peers in the FX complex. At the time of writing, the AUD/USD is trading at 0.6767.

The market mood remains negative, as portrayed by European and US equities tumbling. The AUD/USD got a lift during the Asian session, printing the daily high at 0.6894, spurred by the Reserve Bank of Australia (RBA), hiking rates by 50 bps in back-to-back meetings. Nevertheless, the major began tumbling post-Euro area S&P Global PMIs releases, depicting a gloomy economic outlook in the EU block.

Regarding the RBA’s decision, the bank said that the size and timing of further interest rates would be guided by the incoming data and the Board’s assessment of the inflation outlook. The RBA noted that strong demand, a tight labour market, and capacity constraints in some sectors put upward pressure on prices while emphasizing that inflation is foreseen to peak later this year.