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

Alike every first Tuesday of the month, the Reserve Bank of Australia (RBA) is up for conveying the latest monetary policy meeting and Interest Rate Decision around 03:30 AM GMT.

Having previously heard of a weekly bond-buying purchase tapering to $4.0 billion and an adjustment to the timeline, market consensus favors no changes in the benchmark interest rate of 0.10%, neither altering the 3-year yield targets, during today’s RBA decision.

However, the Aussie central bank policymakers cheered economic recovery and firmer employment figures to placate the bears afterward.

Hence, AUD/USD traders will pay close attention to the details of economic transition from the pandemic, as jabbing gains pace, for fresh impulse.

Ahead of the event TD Securities said,

RBA should be uneventful and all policy settings should remain unchanged. Developments since the September meeting are unlikely to alter the Bank's stance — health and economic challenges pose near-term risks, but re-opening is a reason for optimism. On housing the RBA is likely to mention regulators have commenced formal discussions to introduce macroprudential policies, but this would not be a surprise for markets.

On the other hand, FXStreet’s Valeria Bednarik said,

The market has been speculating about a rate hike by the end of 2022, but RBA Governor Philip Lowe has said that such speculation is way out of RBA’s consensus. Policymakers will likely stick to their optimistic but cautious view of the economy.

How could the RBA decision affect AUD/USD?

AUD/USD refreshes intraday low, snapping a three-day uptrend to take offers around 0.7260 ahead of the RBA interest rate decision. The reason could be linked to the sour sentiment amid fears emanating from China and the US. Also challenging the quote could be the Fed tapering concerns after firmer US data underpin the US dollar rebound.

However, the bears may relinquish controls if the RBA policymakers reiterate their optimistic scenario considering the latest higher vaccinations. It’s worth noting that Aussie PM Scott Morrison earlier signaled the need for 80% jabbing for over 16 years of age to call the local lockdowns off.

It should be noted that the RBA pessimism could add to the latest pullback of the AUD/USD prices towards the previous resistance line from early September surrounding 0.7260.

Technically, a clear downside break of 0.7260 will recall AUD/USD bears targeting the 0.7220 horizontal support, established from late August, but any further weakness will be challenged by September’s low near 0.7170. Meanwhile, 200-SMA and a fortnight-old horizontal resistance, respectively near 0.7300 and 0.7330 guards the quote’s short-term advances.

Key quotes

Reserve Bank of Australia Preview: Sluggish economic progress should mean a cautious RBA 

AUD/USD Forecast: Nearing 0.7300 ahead of RBA’s decision

AUD/USD braces for 0.7330 key hurdle ahead of RBA interest rate decision

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.