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TRADING THE NEWS: RESERVE BANK OF AUSTRALIA (RBA) INTEREST RATE DECISION
The Reserve Bank of Australia (RBA) interest rate decision may drag on the AUD/USD exchange rate as the central bank is widely anticipated to keep the official cash rate (OCR) at the record-low of 1.50% in April.
It seems as though the RBA will continue to endorse a wait-and-see approach monetary policy as the central bank sees ‘scenarios where an increase in the cash rate would be appropriate at some point and other scenarios where a decrease in the cash rate would be appropriate.’ Mixed language coming out of the RBA is likely to weigh on the Australian dollar as the central bank looks to further support the economy, and Governor Philip Lowe & Co. may continue to tame bets for higher interest rates as officials note ‘that there was not a strong case for a near-term adjustment in monetary policy.’
However, an unexpected batch of hawkish rhetoric may trigger a bullish reaction in AUD/USD as it spurs bets for an RBA rate-hike, and an upcoming change in regime may heighten the appeal of the Australian dollar as market participants prepare for higher interest rates.
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