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RBA Unexpectedly Raises Interest Rates; Aussie Dollar Soars

RBA unexpectedly hikes rates 0.25% to 4.75% and notes that risks of inflation are rising over the medium term. Market expectations were for rates to remain unchanged. AUD/USD spiked just over 100 pips on the announcement and now looks to be consolidating at highs near .9970 prior to the European open. A second test of parity looks to almost be a certain at this point. The Federal Open Market Committee interest rate decision scheduled for Wednesday is still the major event risk for the week. I remain short GBP/USD at 1.6055.

By Sam Khorsand, Technical Strategist/Trader