When is the RBA Rate Decision and how could if affect AUD/USD?
RBA Overview
The Reserve Bank of Australia (RBA) will announce its decision on interest rates at 2:30 pm AEST am in Sydney, Australia, 4:30 am GMT.
The central bank is widely expected to leave its Official Cash Rate (OCR) unchanged 1.00%
The central bank cut rates by 25 basis points last month in an effort to restore the labor market strength and keep the economy on track to achieve an inflation rate of 2–3 percent, on average, over time.
RBA to wait and watch
Markets expect the Australian central bank to stand pat this month to study the impact of previous two rate cuts on the economy against the backdrop of the US-China trade escalation and a potential currency war, as China devalued the Yuan to counter the latest US tariffs.
The Australian Dollar, however, is likely to stall its recent recovery and turn south, as the RBA policy statement may sound dovish, leaving doors open for further easing. Hence, markets could consider the possibility of rates falling to 0.75% by year-end.
“The RBA will likely warn about risks to the economy following the intensifying trade war between the US and China. President Donald Trump's announcement of new tariffs on Australia's largest trading partner has dampened prospects for global growth. Moreover, China's retaliation has immediate detrimental effects to the Australian economy – the devaluation of the yuan makes imports of Australian iron ore and dearer,” FXStreet’s Senior Analyst, Yohay Elam, writes.
Technically speaking, any upside is likely to meet strong resistance at 0.6829/37 (daily classic R2/ 10-DMA), above which a test of 0.6850 is inevitable. However, the risks remain skewed to the downside and therefore, the AUD/USD pair looks poised to test the Flash crash low of 0.6748 on RBA’s dovish tilt, opening floors towards the 0.67 handle.
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.