Rates as of 0500 GMT

Market Recap

AUD was the bestperforming currency ahead of this mornings rate decision by the Reserve Bank of Australia RBA. In the event they raised rates by 50 bps as most forecasters had predicted 25 out of 26 polled on Bloomberg. The currency fell on the news a typical buy the rumor, sell the fact response. It tried to recover but at the moment is struggling. The RBA made no significant change to its forward guidance. The Board did say that A full set of updated forecasts will be published next month following the release of the June quarter CPI, indicating that they could hike faster or slower, for that matter depending on the message from the Q2 CPI, but there was nothing to suggest specifically that they might speed up the process.

I read some worrisome news for AUD on Twitter Shanghai Macro Strategist said

The chairman of a leading steel firm said that the entire industry has reported loss and it is unclear when the loss may end. Chinas property and infrastructure construction has been largely completed, while households have no money to buy properties, cars, and home appliances. More importantly, he said the ongoing infrastructure push is unlikely to materialize as there is simply a lack of funds. Local governments debt is already too high to further add leverage. This is in line with our view given Beijings unwillingness to remove constraints on LGFVs local government financing vehicles.

This is very worrisome for AUD as iron ore…