• The AUD jumped to a nine-month high on Tuesday after the RBA signalled higher interest rates were closer.
• In April policy meeting, Reserve Bank of Australia (RBA) kept its cash rate at 0.1% as widely expected.
• Lack of progress in the Russia-Ukraine peace negotiations, may cap the gains of Aussie.

The Australian dollar jumped to a nine-month high against the American dollar on Tuesday and is trading around 0.7160 level now after Australia’s central bank on Tuesday opened the door to the first interest rate increase in more than a decade by dropping a previous pledge to be “patient” on policy.

In wrap up of April month meeting, the Reserve Bank of Australia (RBA) kept its cash rate at 0.1% but noted inflation had picked up and was likely to rise further, while unemployment had fallen faster than expected to 4.0%.

RBA Governor Philip Lowe in a statement said “Over coming months, important additional evidence will be available to the Board on both inflation and the evolution of labour costs.” “The Board will assess this and other incoming information as its sets policy,” he added, omitting any reference made in previous statements to the Board being patient.

Markets are now been priced for a June rate rise to 0.25% 0#YIB: , and imply no less than six more hike to 1.75% by year end.  That aggressive outlook in part reflects expectations the U.S. Federal Reserve will hike by 50 basis points in both May and June, adding to pressure for other central banks to follow.

Talking about the Ukraine developments, Ukraine accused Russian forces of carrying out a massacre in the town of Bucha, where a mass grave and tied bodies of people shot at close range were found in a town seized back from Russian forces. In response, The United States and European countries pledged on Monday to punish Moscow. New sanctions could include restrictions on the billions of dollars in energy that Europe still imports from Russia. The Kremlin denied accusations related to the murder of civilians. The lack progress in the Russia-Ukraine peace negotiations, may cap the gains of Aussie.

AUD/USD 4 Hour Chart:

Support: 0.7497 (S1), 0.7453 (S2), 0.7424 (S3).

Resistance: 0.7570 (R1), 0.7600 (R2), 0.7643 (R3).

The Reserve Bank of Australia signalling high interest closer favors Aussie. We expect a bullish trend for AUD/USD.