Headlines:RBA raises cash rate by 50 bps to 0.85%A couple of early reactions to the RBA rate hike todayAussie gains after the RBA does not disappoint the hawksPoof.. Just like that and the aussie gains evaporateUSD/JPY continues ascend to fresh highs in two decadesGermany April factory orders -2.7% vs +0.3% m/m expectedEurozone June Sentix investor confidence -15.8 vs -20.0 expectedMarkets:USD leads, NZD lags on the dayEuropean equities lower; S&P 500 futures down 0.8%US 10-year yields down 1.3 bps to 3.025%Gold up 0.4% to $1,848.13WTI crude down 0.4% to $118.04Bitcoin down 6.2% to $29,494The day started off with the RBA pulling off yet another unorthodox rate hike, this time by raising the cash rate by 50 bps to 0.85% – against market expectations of either a 25 bps or 40 bps move.The aussie got a jolt higher from 0.7185 to 0.7245 on the decision as bonds continue to get slammed with yields moving higher. While yields did come off a bit as risk sentiment remains iffy, the aussie saw its gains vanish completely – and quickly for that matter.The more defensive risk tones are continuing to underpin the dollar but also the continued push higher in USD/JPY is helping with general flows, as the pair seeks to extend its technical breakout from the start of the week.The high today reached 132.99 and price action continues to hold close to the highs, with the dollar also seen gaining elsewhere across the board.EUR/USD is down 0.3% to 1.0668 while GBP/USD had a bit of a seesaw session, falling from 1.2500 to 1.2430 before climbing back to 1.2530 and then falling back to 1.2480-90 levels after running into familiar resistance.As risk is keeping on the softer side, the kiwi is the main laggard with NZD/USD slipping from 0.6490 to 0.6435 during the session with the high point coming right after the RBA rate decision.

Here’s a look at how the equities space is doing:Eurostoxx -1.1%Germany DAX -1.1%France CAC 40 -1.0%UK FTSE -0.2%S&P 500 futures -0.9%Nasdaq futures -1.1%Dow futures -0.7%That’s a bit of a retreat from the opening levels earlier in the day here. The bond selling is also hitting the pause button for now, with 10-year Treasury yields seen down to 3.02% from around 3.05% at the start of the session.But the dollar is still holding its ground with EUR/USD down slightly to 1.0670 near the lows for the day, while GBP/USD is down 0.3% to 1.2490 after a bounce from 1.2430 to 1.2530 as pointed out here. USD/JPY continues to stay perky and is up 0.7% to 132.80, staying in the hunt of a potential push towards 135.00 in the bigger picture.Meanwhile, AUD/USD is down slightly to 0.7180 after its post-RBA rally was faded quickly – falling from a high of 0.7245.

Wants to refrain from commenting on FX levelsJust the typical light jawboning by Japanese officials. The yen is still keeping on the softer side after the break to fresh highs in over two decades this week. USD/JPY is up 0.6% to 132.70 at the moment, after having briefly closed in on the 133.00 handle earlier in the day.

The pair dropped to a low of 1.2430 earlier as the dollar also firmed across the board, with USD/JPY came close to touching 133.00 for a brief period. But since then, the greenback has seen gains ease up as Treasury yields slip back a little and USD/JPY also coming down from 132.99 to 132.69 at the moment.In turn, cable has produced a notable bounce from 1.2430 to 1.2533 in the past hour. The bounce is being stalled by familiar resistance from the 100-hour moving average (red line) at 1.2531 currently. The 200-hour moving average (blue line) will add to another layer of defense for sellers, seen at 1.2573 – as evident in the past few sessions.There is a slight improvement in risk tones even if equities are keeping lower across the board. S&P 500 futures have trimmed losses from 0.6% to be down 0.3% now, with Nasdaq futures also seen down 0.4% from around 0.8% earlier. European indices are still lower across the board, with losses ranging around 0.4% to 0.7% mostly.But the greenback’s firmness is being contested as bond yields pull back a little on the session. 10-year Treasury yields are now down 1.7 bps to 3.02% after being just above 3.05% earlier in the day.Going back to cable, it is tough to see much momentum for a break higher as long as risk tones remain sluggish and the dollar is steadying itself over the past few sessions. The defense of the key hourly moving averages only serves to reaffirm that sellers are in near-term control at the moment – going by the technical perspective at least.Looking at the fundamentals, the Fed also remains more hawkish than the BOE and the UK’s economic struggle will be a real test of resolve for Bailey & co. in the months ahead – even with surging inflation.

Prior -22.6

Euro area investor morale rose more than expected – the first increase since the Russia-Ukraine conflict – but the dour economic tone continues to reverberate for the time being amid supply issues and inflation. The current conditions index was seen at -7.3 in June, a slight improvement from the -10.5 reading in May.
Sentix notes that:
„As impressive as the improvement in the situation and expectations values may appear at first glance, this is unlikely to mark a turnaround. While consumers are already suffering from rising prices, many companies have been able to pass on their sharply rising costs to their customers and benefited from people rushing to buy goods and services before price increases. However, this phase looks set to finish as end consumers will have to cut back at some point, and monetary policy could become more restrictive from July.“