When is the RBA rate decision and how could it affect the AUD/USD pair?

RBA Rate Statement overview

The Reserve Bank of Australia (RBA) is scheduled to release its decision on benchmark cash rate along with rate statements at 03:30 GMT on Tuesday. The Australian central bank has long been a supporter of monetary policy tightening until recently when it gave equal probabilities to either side rate moves. As a result, investors will closely observe the RBA's rhetoric concerning future rate guidance. It should also be noted that the central bank isn’t expected to alter its benchmark cash rate for today.

Analysts at ANZ say,

Today’s RBA board meeting will be keenly watched by the market. Over recent months the RBA has revised its outlook lower and started to characterise the risks around the Australian economy as more balanced. This is well priced, with the market close to pricing a full cut by the end of 2019.

For the market to price in anything further, we will need to see a further shift in the RBA’s language. In this light we are focussed on its outlook for domestic growth. The GDP partials which have been released to date suggest that the RBA will need to downgrade its Q418 forecasts. While it does not typically use the post meeting statement to flag forecast changes we will be watching to see if it flags increased downside risks.

Wespact came up with its own comments saying, 

The RBA policy statement at 2:30pm Syd/11:30am Sing/HK will surely produce yet another steady hand on the cash rate at 1.5% but there is certainly more interest in the tone of the statement than there was for much of last year. There should be more tweaks to the language around housing but similar language on the labour market and we haven’t had an inflation update since the 5 Feb meeting. There should be some market caution on the final paragraph describing the policy stance, since the Feb 2019 paragraph was identical to Dec 2018, yet Governor Lowe revealed the next day that the Board had changed its outlook on the next move in rates, from a probable hike to “more evenly balanced.” 

How could it affect the AUD/USD?

While the recent change in the RBA’s tone highlights the importance of today’s events, the central bank might not risk favoring bears crying for a rate-cut in the years to come. However, recently soft data could confine the central-bank from clearly being a bull.

Should the RBA refrain from giving any additional information for future rate moves, chances of the AUD/USD to maintain its gradual decline towards 0.7040 can’t be denied. In a case when the central bank spots economic weakness and reaffirms its recent rate bias, an extended south-run to 0.7000 and then to 0.6980 seems brighter. Alternatively, an upbeat rate statement turning down recent calls from the global analysts could lift the Aussie towards 0.7110 and then to 100-day simple moving average (SMA) level of 0.7165.

Key notes

AUD/USD stays below 0.7100 ahead of RBA announcements

AUD/USD Technical Analysis: Aussie bulls looking for a break above 0.7100 figure ahead of RBA

About the RBA Rate Statement

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.