China Rates Hikes could Take Down Australian Dollar
The Australian Dollar is under pressure overnight following a rate hike by China’s central bank. The 25 basis point rise to 3 percent is the second attempt in just over a month to fight against inflation. The interest rate increase is an attempt to slow down the world’s number 2 economy.
The AUD USD rose sharply overnight after the Reserve Bank of Australia unexpectedly hiked its key benchmark cash rate by a quarter-point to 4.75%. In its policy statement, the RBA cited inflation risks as the main reason behind the hike. It was the first rate increase since May 2010.
Dollar Soars, Euro Plunges as Fed Hikes Discount Rate
The U.S. Dollar is mounting a strong rally late in the trading session following news that the Fed is set to hike the discount rate 25 basis points to 75 basis points. While not actually beginning a tighter monetary policy, a hike in the borrowing rate charged to member banks is a sign that the Fed is getting ready to begin removing stimulus and raising other key interest rates.