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RBA just raised its interest rates, yo!

Will it be enough to pull AUD/USD above its short-term support zone?

Before moving on, ICYMI, yesterday’s watchlist checked out EUR/CAD’s weekend gap after it broke below a Head and Shoulders pattern. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Liz Truss to become next UK Prime Minister

Eurozone retail sales ticked up by 0.3% in July but the downward trend remains

OPEC+ agrees to cut production by 100,000 barrels a day

PMIs suggest the UK economy sliding into contraction in August

BRC: August U.K. sales slow as consumers limit spending amidst higher cost of living

Japan’s July real wages continue to slide (1.8% from 2.0%) as rising consumer prices weigh

PBoC to cut foreign exchange RRR by 200 bps to help limit yuan weakness

Asian stocks rise on China stimulus, upcoming rate action

RBA raises official rate by 50 bps to 2.35% amid inflation fears

Upcoming Potential Catalysts on the Forex Economic Calendar:

U.S. ISM services PMI at 2:00 pm GMT
AU AIG services index at 10:30 pm GMT
AU quarterly GDP at 1:30 am GMT (Sept. 7)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: AUD/USD

 AUD/USD 1-hour Forex Chart

AUD/USD 1-hour Forex Chart

As expected, the Bank of Australia (RBA) raised its interest rates by 50 basis points to 2.35%.

This is a big deal to some investors who are noting that RBA’s rates are now above the floor of its “neutral” rate zone.

Does this mean that RBA is also willing to tolerate “some pain” in order to keep inflation in check?

We might get clues from tomorrow’s quarterly GDP release.

Growth that’s higher than the 1.0% uptick that markets are expecting could push AUD/USD above its firmly above the .6775 September support. Heck, it could even bust AUD above its 1-hour trend line resistance!

A worse-than-expected GDP reading, on the other hand, would mean that the RBA doesn’t have a lot of room for more rate hikes.

Weak growth, combined with potential risk aversion or dollar demand, could drag AUD/USD to new September lows below .6750. Yipes!