10:30pm (NY Time) AU RBA Rate Decision Forecast 4.25% Previous 4.00%
ACTION: AUD/USD SELL 4.00% BUY 4.50% AUD/USD
Reserve Bank of Australia (RBA) is going to release its official cash rate decision today and majority of economistsare expecting a possible split decision with today’s rate decision following the lagging recent economic indicators despite of a rising in inflation and housing prices.
Out of the 23 analysts surveyed by bloomberg, 14 expect to see RBA hiking rates as expected. However, it would be beneficial for Australian economy if RBA decides to pause rate hike during this meeting, according to Mike Smith of ANZ. However, with the rising inflationary pressure due to high demand for commodities and risk appetite sentiment, if RBA pauses this meeting, it may be missing a perfect opportunity to curb inflation, and it may have to take drastic measures in upcoming meetings and play catch up… Therefore, it is anyone’s guess which direction RBA may end up going.
Therefore, there is really no upside for AUD as if RBA hikes rates, market would have taken that as just another release according to forecast expectation, but if RBA keeps rate unchanged, AUD should drop immediately.
As it is difficult to predict direction at release or pre-release, I’m about 70% certain that AUD will drop after release, so the bias would to SELL AUD after the release…
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