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.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends sideways grind below 1.0900
EUR/USD stays in a consolidation phase below 1.0900 following the previous week's rally. In the absence of high-tier data releases, the US Dollar stays resilient against its rivals as investors scrutinize comments from central bank officials.
Gold pulls away from record highs, holds above $2,400
Gold rose sharply at the beginning of the week on escalating geopolitical tensions and touched a new all-time high of $2,450. With market mood improving modestly, XAU/USD erases a majority of its daily gains but manages to hold above $2,400.
GBP/USD holds steady near 1.2700, Fedspeak in focus
GBP/USD fluctuates in a narrow channel near 1.2700 on the first trading day of the week. The cautious market stance helps the US Dollar hold its ground, while market participants assess remarks from central bank officials ahead of this week's key events.
Ripple stays above $0.50 on Monday as firm backs research on blockchain and quantum computing
XRP price holds steady above the $0.50 key support level and edges higher on Monday, trading at 0.5130 and rising 0.70% in the day at the time of writing.
Week ahead: Nvidia results and UK CPI falling back to target
What a week for investors. The Dow Jones reached a record high and closed last week above 40,000, for the first time ever. This is a major bullish signal even though gains for global stocks were fairly modest on Friday, and European stocks closed lower.