When is the decision of the RBA made and how could it affect the AUD / USD?

Overview of the RBA

The Reserve Bank of Australia (RBA) will announce its decision on interest rates at 2:30 pm Paris time, Sydney, Australia at 4:30 am GMT.

The central bank is expected to broadly lower the official rate by 25 basis points to a record low of 1.25% in order to restore the strength of the labor market and keep the economy on track. an inflation rate of 2 to 3%, on average, over time.

The central bank cut rates by 25 basis points for the last time in August 2016.

The markets envisaged for two rate reductions

Australia's Overnight Index Swap (OIS) curve currently shows that markets are waiting for the central bank to cut rates by 25 basis points today and in September. Overall, there is more than a 80% chance of two rate cuts this year.

In particular, the markets anticipated a rate cut of 25 basis points until June in the last four weeks.

This is clear from the fact that the yield on 10-year Australian government bonds fell by 36 basis points in May. In addition, the two-year return, which closely follows rate expectations, declined by 28 basis points. In addition, the two-year yield, currently at 1.125%, is down 80 basis points.

It therefore seems prudent to say that the market is fully integrated into two rate cuts.

As a result, the AUD can get a strong bid if the RBA cuts rates as expected, but refrains from signaling aggressive easing.

The Australian dollar could, however, feel the weight of gravity if the policy statement announced a strong easing, forcing markets to predict the possibility that rates will fall back to 0.75% by the end of the year. year.

Technically, the AUD / USD seems to have reached a low of 0.6865 in the short term and is expected to test the 50-day moving average, currently at 0.7020 with a bias based on the relative strength index (RSI ) at 14 bullish days above 50 and 5 and 10 days MA at the north.

About the RBA rate decision

The interest rate decision of the RBA is announced by the Reserve Bank of Australia. If the RBA is fierce about the inflationary outlook of the economy and raises interest rates, it is positive or bullish for the AUD. Similarly, if the RBA has an accommodative view of the Australian economy and keeps the interest rate in effect, or reduces the interest rate, it is considered negative or bearish.