RBA meeting will set the way for AUD

31 July, 2017

The monetary policy of the Reserve Bank of Australia (RBA) is the key driver of the Australian dollar. The RBA will announce the results of its August meeting at 07:30 MT time on August 1.

At its last meeting, Australian central bank left the benchmark interest rate unchanged at 1.5%, but hinted that official rate should be higher by 2 percentage points to ensure the upper limit on inflation and reasonable economic growth, although there were no comments on when the rate might rise to this level. This revelation from the RBA made AUD/USD rise to the highest levels since the beginning of 2015. The problem is that such high value of the Aussie has the same effect as a rate hike and may actually prevent the Reserve Bank of Australia from raising rates.

August meeting of the RBA is very important. No doubts that it will provoke strong movements in AUD/USD and probably even set a new trend for this pair. If Australian central bank keeps hinting at the need of higher interest rates, the AUD will rise. However, if the RBA warns that the Australian dollar’s exchange rate has become too high, there will be a sell-off in AUD/USD.


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