RBA overview
The Reserve Bank of Australia (RBA) is all set to announce the latest monetary policy decision at 4:30 am GMT on Tuesday. The central bank is widely expected to keep policy rates unchanged at 0.25% and retain the yield curve control program launched in March.
Focus on yield curve control
The policy focus for today’s meeting will be on the Yield Curve Control (YCC ) policy, according to analysts at Australia New Zealand (ANZ) bank.
We will be interested to see whether the RBA will signal that further tapering is on the way. There is a natural tapering this week and next, with the Easter holiday reducing the number of days on which the RBA will purchase bonds.
We think the RBA will stick with four days of purchases after the Easter break, but maintain purchases at AUD 2 billion per day for a while longer.
Such a move would signal that the RBA is happy with a relatively steep bond curve and current semi spreads to bond. In our view this would be interpreted as a tightening of policy relative to what other countries are doing, with unwanted implications for curve slope, spreads and potentially the AUD.
Markets price in future rate cuts
The ASX 30 day interbank cash rate futures implied yield curve shows investors expect the RBA to reduce the cash rate by 25 basis points in July.
Impact on AUD
AUD/USD is better bid around 0.6120 at press time and will likely extend gains if the RBA's policy statement shows bigger tapering is on the way. Daily bond purchases were reduced from AUD 3 billion to AUD 2 billion following the achievement of the YCC target last week.
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.
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 fluctuates near 1.0700 after US data
EUR/USD stays in a consolidation phase at around 1.0700 in the American session on Wednesday. The data from the US showed a strong increase in Durable Goods Orders, supporting the USD and making it difficult for the pair to gain traction.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold stays in consolidation above $2,300
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.