FXstreet.com (Barcelona) - The RBA’s decision to hold rates seems a done deal, with only a 5% chance of a cut priced in, notes Westpac FX strategist Sean Callow, who adds that "focus will be on the statement, with most attention on the final paragraph."

Sean adds: "For the past two months the RBA has judged that the inflation outlook is low enough to 'afford scope to ease policy further, should that be necessary to support demand.' A minority of pundits has suggested that the RBA is so firmly on hold that it will remove this phrase today. If it does so, AUD/USD would probably finally break through 1.0500."

However, Sean admits that the RBA would gain little from such an obvious change in bias, saying that "the past month has not provided substantive new information on investment plans or other key readings on demand, but we have seen record highs on AUD TWI, which would be exacerbated by a change in the RBA’s tone today.

"AUD/USD should suffer only a modest dip if the statement is as we expect" Sean concludes.