When is the RBA Interest Rate Decision and how could it affect AUD/USD?

Having recently paused to analyze the success in combating the negative impacts of the coronavirus (COVID-19), the Reserve Bank of Australia (RBA) is up for conveying its latest monetary policy decision at 04:30 GMT on Tuesday.

While the Aussie central bank has already shown the intention to keep the interest rates near the record low of 0.25%, no major forecasts are supporting an increase in the Quantitative Easing (QE). However, recently upbeat rhetoric from Governor Philip Lowe and Deputy Governor Guy Debelle favor chances of upbeat comments in the RBA Rate Statement. Hence, AUD/USD traders remain cautiously optimistic as the quote seesaws near the monthly high ahead of the event.

Analysts at Westpac provide key details of the RBA’s fight against the virus and probable outcome:

The RBA is providing considerable stimulus to the economy through a range of policies and will continue to do so. Interest rates and policy settings will be unchanged in July. The key elements of the RBA's response to the pandemic are as follows. (1) Lowering the cash rate to 0.25%. (2) Targeting the 3-year government bond rate at 0.25%. (3) Market operations, as needed, to provide ample liquidity to the banking system. (4) A Term Funding Facility for the banking system providing 3-year funding at 0.25%. (5) Setting the rate paid on Exchange Settlement balances at the RBA at 10bps. The cash rate is set to remain at its current level for a very long time – we assess until at least the end of 2023 although the 3yr bond target rate will likely be lifted during 2022. In the statement text, there will be interest in commentary around Australia’s recovery and whether the sustained rebound in A$ is seen as worthy of mention.

TD Securities, on the other hand, expect no major surprises from the event:

There should be no surprises with the RBA keeping the cash rate on hold. The Bank is likely to reiterate it stands ready to provide liquidity as needed. This was backed by actions last month, the Bank injecting short term funds to offset the sizeable maturity of reverse repos in June. Expect significant liquidity over the coming months as the Term Funding Facility is drawn down.

How could the RBA decision affect AUD/USD?

Considering the AUD/USD pair’s latest run-up to multi-day high, traders are looking for any downbeat remarks to book the profits and wait for lower prices for fresh entry. However, policymakers are more likely to keep praising their efforts to tame the pandemic’s side-effects to favor the bulls, which in turn can restrict fresh downside.

As a result, traders should wait for a clear view of the Australian dollar’s recent performance by the RBA policymakers as fears over the spike can trim the bulls’ strength. However, an absence of any such clues, coupled with optimism in the rate statement, could keep the AUD/USD prices well directed towards 0.7000 threshold. It’s worth mentioning that any surprise announcements, either in the form of QE or the most unlikely interest rate change, could have severe reactions.

Technically, the AUD/USD pair’s ability to cross the mid-June top surrounding 0.6975 enables a pierce of the 0.7000 threshold. Though, the multi-month high of 0.7065, flashed on June 10, could challenge the quote’s further upside. Meanwhile, 21-day SMA near the 0.6905 level, followed by 0.6900 round-figures, will offer immediate support ahead of a three-week-old support line near the 0.6850.

Key quotes

AUD/USD: Bulls keep 0.7000 on radars ahead of RBA interest rate decision

AUD/USD Forecast: Waiting for RBA’s announcement

Reserve Bank of Australia Preview: Policymakers to remain cautiously optimistic

About the RBA interest rate decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD nears 1.19 amid mixed US data

EUR/USD is trading close to 1.19, extending its gains after ADP's private-sector report badly misses expectations with an increase of only 167,000 jobs in July. The greenback had already been falling with yields. The ISM Non-Manufacturing PMI beat with 58.1. 


XAU/USD bulls unstoppable, renews life-time highs near $2040

With ‘buy the dips’ emerging as the main underlying theme behind the gold price action so far this week, the bulls flex their muscles further to record fresh all-time highs near $2040.

Gold News

GBP/USD trades well above 1.31 amid dollar weakness

GBP/USD is advancing towards this month high at 1.3169, recovering as the dollar retreats. The UK government is under scrutiny for its management of the virus crisis. US Services PMIs are eyed. The ADP NFP missed with 167K.


ETH/BTC on retreat, BTC recovery gains traction

ETH/BTC has topped at $0.03528 on Tuesday and retreated to $0.03448 by the time of writing. The cross has lost about 1% since the start of the day. The RSI on a daily chart reversed to the downside, signaling that the price is ready for a correction from overbought territory.

Read more

WTI hits fresh two-week highs near $42.50 ahead of EIA data

WTI (futures on Nymex) extends its winning-streak into the third straight day on Wednesday, as the bulls challenge the July high of $42.51.

Oil News