RBA Rate Decision on Tap at 4:30GMT

The RBA is set to release its next rate decision a bit later in the session which could have an influence on the above mentioned pairs. At the previous meeting on May 7th, the RBA cut rates by 0.25% bps to 2.75%.

The pair has been a steep downtrend since the last meeting, losing just over 700 pips and trading as low as 0.9528 at one point last week. However, the pair did manage to close today’s session sharply higher, climbing 147 pips to finish at 0.9769. Over the past two weeks, both Private Capital Expenditures (-4.7% vs. 0.7% forecast) and Retail Sales (0.2% vs. 0.3% forecast) came in below estimates. However, Building Approvals did surprise to the upside (+9.1% vs. 4.1% forecast). Given the fact the pair lost as much as 7% over the past 3 weeks, it’s hard to imagine the RBA not remaining on hold at the current level of 2.75%.

According to analysts at NAB Global, "markets are well and truly priced for no change (this morning priced as an 84% chance), though the market also remembers that the May cut was something of a surprise. We expect no change given the RBA’s semi-relaxed stance even though we would see a rate cut as a suitable policy given the coming mining downturn and still low inflation"