OctaFX | OctaFX Forex Broker
Open trading account

RBA minutes next: Impact on the AUD/USD

FXstreet.com (Barcelona) - The RBA is about to publish the minutes of its May meeting, when an unprecedented policy decision to reduce the benchmark interest rate by 0.25 bp to record lows at 2.75% was taken. The statement from the central bank may provide traders with fresh clues about the economy and the immediate monetary policy moves.

As Mike Jones, currency analyst at BNZ, notes: "Investors will be scouring the RBA minutes for any hints a follow-up (June) rate cut is on the cards." However, as Mike adds, "the Aussie OIS market is currently only pricing around a 20% chance of such, so there is certainly room for the AUD (and by association the NZD) to suffer on any unexpected RBA dovishness."

However, in view of NAB, odds are that limited volatility may be seen, "given the subsequent release of their growth and inflation forecasts in their quarterly Statement the Friday before last, thus this one might not draw much reaction" the bank said.

Westpac currency analyst Sean Callow supports NAB's view, saying: “RBA minutes are never ignored by markets but the Statement of Monetary Policy released three days after the meeting does suggest there should be little new today.”

“Perhaps there will be some focus on the likely return of the phrase 'use some of that scope' which on the day of the rate cut seemed to hint that a follow-up was likely at some point” Sean added.

Nonetheless, the point that Mike makes above is important, and seems to suggest that "any comments pointing towards further economic slowdown and possibilities of a rate cut, will rush market players to price in another rate cut, leading to more AUD slides" said Valeria Bednarik, chief analyst at FXstreet.com. On the contrary, a neutral/hawkish wording may be enough to find additional short term buyers, says Valeria, who urges to not get carried away as the underlying trend remains bearish.

Flash: RBA might provide little new info - Westpac

Westpac currency analyst Sean Callow thinks the RBA minutes might provide little new information following the Statement of Monetary Policy released three days after the meeting. NAB shared this same view earlier.
Read more Previous

USD/JPY buyers continue to support the 102.00 area

The USD/JPY has started the weak off on a soft note, finishing the day down 71 pips at 102.25 but again holding support near the 102.00 level which continues to be an area of steady demand the past four trading days.
Read more Next
Start livechat