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Trading the News: Reserve Bank of Australia (RBA) Interest Rate Decision

  • Reserve Bank of Australia (RBA) to Keep Cash Rate at Record-Low of 1.50%. Will Governor Philip Lowe and Co. Continue to Endorse a Wait-and-See Approach for Monetary Policy?
  • AUD/USD[1] Rate Eyes December-Low (0.7501). Relative Strength Index (RSI) Comes Up Against Oversold Territory.
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The Reserve Bank of Australia (RBA) interest rate decision may fuel the recent weakness in AUD/USD should the central bank endorse a wait-and-see approach for monetary policy.

Governor Philip Lowe & Co. may continue to curb expectations for an imminent rate-hike as ‘inflation remains low, with both CPI and underlying inflation running a little below 2 per cent,’ and the central bank may merely attempt to buy more time amid ‘concerns about the direction of international trade policy in the United States.’ In turn, more of the same from the RBA may produce a bearish reaction in the Australian dollar[2] as market participants push out bets for higher borrowing-costs.

However, a material shift in the forward-guidance for monetary policy may curb the recent weakness in the AUD/USD rate, and a batch of hawkish comments may heighten the appeal of the Australian dollar as it boosts speculation for a rate-hike in 2018. Sign up and join DailyFX Currency Strategist Ilya Spivak LIVE[3] to cover the RBA rate decision.

Impact that RBA rate decision has had on AUD/USD during the previous meeting

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Data Released

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Actual

Pips Change

(1 Hour post event )

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