FXTM information and reviews
FXTM
95%
OctaFX information and reviews
OctaFX
94%
XM information and reviews
XM
93%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
90%
HFM information and reviews
HFM
89%

What To Expect From RBA Rate Decision


7 May 2019

The Aussie is set to be among the most volatile currencies this week, starting off with the interest rate decision from the RBA.

A large number of analysts are projecting a rate cut as soon as this meeting. But, that doesn’t mean the notoriously conservative bank is about to pull the trigger. If it does, though, it will be in the middle of an election.

On the other hand, the last time interest rates were in this range, the bank did cut rates. A rate cut could significantly help out the faltering housing situation in Australia by reducing the cost of home loans.

What’s Coming Up


Ahead of the rate decision, we have a series of economic data which is also important to the market. The barrage of data later today or early in the morning tomorrow is likely to set the course for the week. On Tuesday at 03:30 CET (or Monday at 21:30 EST) we have the release of the trade balance and retail sales.

Normally the trade balance and retail sales data are more than capable of moving the market significantly on their own. But, with the market focused on the RBA decision, their effect could be muted or drowned out by a bigger move later in the day. Nevertheless, they are important factors to consider in trading.

Trade Balance


Australia’s trade balance has been breaking new records over the last couple of months. And high iron ore prices are supporting it. Last month’s result was way above expectations, and projections this time around are even higher: AUD5.39B compared to AUD4.80B last month.

Commodity prices in Australia increased by a further 0.9% last month, compared to a 0.8% increase the prior. This shows that exports are still getting a good price boost, led by the largest export, iron ore.

Iron ore broke above $90.00/ton and stayed up there for most of April, registering $93.79 at the close of the month. The trade balance has been supported by burgeoning exports and a drop off in demand, especially for consumer products. This is likely a result of the economic situation.

Retail Sales


We can expect retail sales growth to slow a bit to 0.7% monthly over the 0.8% registered prior. However, this is still a positive indicator and above the average that’s been registered for the last year or so.

Arguments in favor of holding off the interest rate include the argument concerning retail sales. While inflation isn’t as robust, consumers are still buying. That’s a sign the economy is still in good stead, and the RBA might be willing to hold out another month to see if the data returns to normal.

The Interest Rate Decision


The decision will be coming out at 06:30 CET (or 00:30 EST.) Most analysts are saying there is about a 50/50 chance that the bank will cut rates. Whether they do or not, the market will be paying close attention to the rate statement. That is to either understand why there was a change or to calibrate the dovish tone of the statement if the bank chooses to hold and “jawbone” the market.

Prior to the release of the CPI data, there was a pretty strong consensus that there wouldn’t be a change in the rate for quite some time. Now, there is talk of up to two rate cuts this year. However, the market often gets ahead of itself and we shouldn’t forget that the RBA has a reputation for not making sudden moves.

The uncertainty of a situation like this maximizes the potential for a strong market reaction. Since there isn’t a consensus on what will happen, it’s hard for the market to price anything in. A cut would likely send the AUD tumbling, whereas a hold would strengthen the currency despite disappointing equity markets.

Share:


Related

The Downfall of Euro in 2022: the Analysis of its Reasons, the Current Situation, and the Objective Forecast
The Downfall of Euro in 2022: the Analysis of its Reasons, the Current Situation, and the Objective Forecast

Before getting down to analyzing why Euro reminds of a mafia victim in cement shoes falling off a Chicago bridge, allow us to open it up with a meme joke that best describes this whole ordeal...

5 Oct 2022

Positive mood stalls on the “pivot” trade
Positive mood stalls on the “pivot” trade

USD slid against most of its major peers. The DXY closed a tick above its lows of 110.05. Resistance is at 110.76 while next support is 109.29. GBP gained for a sixth session in a row, a winning streak not seen since April 2021...

5 Oct 2022

OctaFX glances at current economic shifts - the good, the bad, and the strange
OctaFX glances at current economic shifts - the good, the bad, and the strange

Pandemics and health crises, political tensions, geopolitical tension flashpoints popping up, Western sanctions on significant European and Asian economies, and grave tensions between...

3 Oct 2022

The Euro rebounded from the low
The Euro rebounded from the low

After updating its multi-year lows again, the major currency pair rebounded. The current quote for the instrument is 0.9656. Last night, the local interest in risks improved a bit, helping the asset to successfully correct...

29 Sep 2022

Gold Shows Signs of Life, But Heads Towards Another Losing Month
Gold Shows Signs of Life, But Heads Towards Another Losing Month

The precious metal is largely considered as a hedge to inflation, but it has not confirmed this status during the current year. It did kick it off with a rally, but as the Fed begun hiking rates back...

28 Sep 2022

Forex and Cryptocurrencies Forecast for September 26-30, 2022
Forex and Cryptocurrencies Forecast for September 26-30, 2022

Last week, all the attention of the markets was focused on the FOMC meeting of the US Federal Reserve, which took place on September 21. The probability of another rate hike by 75 basis points (bp)...

26 Sep 2022


Editors' Picks

IronFX information and reviews
IronFX
88%
FXCM information and reviews
FXCM
87%
NordFX information and reviews
NordFX
85%
MultiBank Group information and reviews
MultiBank Group
84%
Vantage information and reviews
Vantage
83%
FP Markets information and reviews
FP Markets
81%

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.