10:30pm (NY Time) AU RBA Rate Decision     Forecast 3.50%    Previous 3.25%
ACTION: AUD/USD         BUY 3.75%    SELL 3.25%

RBA started the rate hike cycle during last rate decision and now analysts believe RBA will likely to hike rates by another 25 basis point to 3.50% today.  Should RBA hike rates by 50 basis point instead of 25, we should see AUD/USD break upwards and possibly retest some resistance areas; however, if RBA decides to keep rates unchanged at the current level, we could see AUD/USD drop below the 0.8800 level.

The analysts estimate range is from unchanged to 3.75%, therefore we shall wait patiently for the release and trade in the direction of the surprise.  If RBA hikes rate as expected to 3.50%, market could react with some “BUY on rumor and SELL on news” type of movement and push AUD/USD a bit lower than the pre-market levels.  Of course it is important to keep the entire context of the market in mind when trading this release.

With NFP and other high impact news scheduled this week, RBA’s rate decision could be the only risk appetite event of global caliber, should this release disappoint the market, we could see an early start of risk aversion movement this week.

I’ll be trading this release live as usual and will post the video back.

Henry

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