RBA overview
The Reserve Bank of Australia (RBA) is all set to announce the latest monetary policy decision at 3:30 am GMT on Tuesday. Although the central bank is widely anticipated not to announce any changes into its present monetary policies, recent signals for unconventional monetary policies from the RBA board makers shifts focus to the rate statement in order to anticipate possible moves in 2020.
Market expectations
TD Securities follows general market consensus while anticipating no fireworks at today’s RBA meeting as it says:
The RBA meets to set policy today and in line with the consensus we look for the RBA to leave rates on hold at 0.75%. Governor Lowe in his speech last week on unconventional policy did not steer markets towards a cut at the December meeting either. He reiterated comments from the November RMA meeting minutes, which suggested the long and variable lags of prior easing means it would need time to assess the data. This essentially rules out a rate cut at this meeting, but we continue to look for a 25bp rate cut in February.
Westpac offers details of likely outcome while saying:
There is little tension over the outcome of the RBA Board meeting today (2:30 pm Sydney/11:30 am Singapore/Hong Kong). Markets are virtually fully priced for a steady hand at 0.75%, with a Feb 2020 rate cut to 0.5% (Westpac’s view) about 2/3 priced. Much of the statement wording should be either identical or very similar to November, including a pledge that the Board will, ‘continue to monitor developments, including in the labor market, and is prepared to ease monetary policy further if needed.’
How could the RBA decision affect AUD/USD?
Given the broad market consensus of a no rate change keeping traders’ eye to the rate statement, mentions of unconventional monetary policy tools as well as heightened risk to the economy will be closely observed. In absence of the same, the AUD/USD could extend its recent run-up towards early-November lows nearing 0.6860 ahead of highlighting 0.6900 mark for the Bulls. Meanwhile, the pair’s downside break of 100-day Simple Moving Average (SMA) level of 0.6815 can recall 50-day SMA level surrounding 0.6800 and November month low near 0.6755.
Key Notes
RBA preview: Probability of rate cut is very low, according to OIS
AUD/USD consolidates gains to 0.6820 ahead of RBA’s rate decision
AUD/USD Forecast: Waiting for the RBA’s decision
About the RBA 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.
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