When is the RBA Statement on Monetary Policy and how might it affect AUD/USD?
|Statement on Monetary Policy overview:
Having witnessed a surprise no rate cut from the Reserve Bank of Australia (RBA) recently, global traders will be on the lookout for details at 11:30 am Syd/9: 30 am Sing/HK, 01:30 GMT on Friday when the RBA’s quarterly statement on monetary policy will be released.
The Australian central bank conveyed a mild cut to its near-term growth and inflation forecasts in the rate statement just after Tuesday’s meeting. The mean CPI forecast is being trimmed to 1.75% from 2.0% for 2019 whereas GDP might grow 2.75% versus 3.0% previous anticipation during 2019 and 2020.
Analysts at Westpac highlighted the need to wait for more details on the latest forecasts as they said:
The RBA releases its quarterly Statement on Monetary Policy at 11:30 am Syd/9: 30 am Sing/HK. In Tuesday’s Board statement, the RBA lowered its trimmed mean CPI forecast for 2019 from 2% to 1.75%, and for 2020 from 2.25% to 2%. That is only a 0.25ppt reduction in the forecast. Moreover, the RBA said that its “central scenario is for the Australian economy to grow by around 2¾ percent in 2019 and 2020.” This is only a modest downward revision from 3.0% and 2.75% in the February SoMP. There are plenty more forecasts to be revealed today and we will also be interested in the language around the labor market, to try to sense what degree of weakness the RBA is looking for to trigger a rate cut.
How might the event affect AUD/USD?
AUD/USD has been under pressure due to the recent tensions between the US and China over trade terms. Though, RBA’s refrain from altering its present monetary policy set the tone a bit lighter and may help the Aussie if the central bank offers more upbeat details in its quarterly monetary policy statement.
Technically, 14-day relative strength index (RSI) is near to oversold territory and the pair remains above 0.6960 recent lows. A break of 0.6960 can drag prices to 0.6920 while extended downturn might not hesitate to recall January 2016 low around 0.6820. Also, an upside clearance of 0.7000 enables the quote to aim for 0.7055 and April highs near 0.7070 with 100-day simple moving average (SMA) of 0.7110 and 200-day SMA level of 0.7170 likely entertaining the bulls past-0.7070.
Key Notes:
AUD/USD clings to 0.6990 as the key US-China trade talks begin, RBA MPS awaited
AUD/USD Analysis: waiting for the RBA, bearish
About the RBA Monetary Policy Statement:
The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negative (or bearish).
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