The Reserve Bank of Australia is set to announce its next monetary policy decision tomorrow at 5:30 am BST. RBA is expected to deliver another 50 basis point rate hike, pushing the main rate to 1.35%. This follows a 50 bp move at the last meeting. Note that the previous 50 basis point rate hike was a hawkish surprise as the market expected a 25 basis point move. RBA noted back then that inflation has increased significantly and expressed commitment to fight excessive price growth. RBA Governor Lowe suggested 2.5% as a reasonable neutral level of interest rates. While it looks like a done deal that the RBA will tighten, the question is whether it will continue with a 50 basis point rate hike pace or slow down to 25 bp moves.
The Australian dollar is trading higher today and outperforms all other G10 peers. AUD benefits from improvement in moods, allowing AUDUSD to test a recently broken support level in the 0.6850 area. The pair broke below this area at the end of previous week and reached the lowest level since the beginning of June 2020. With market expectations centered around a 50 basis point rate increase, RBA is unlikely to deliver a hawkish rate surprise. However, guidance on the near-term rate path will be welcome. Should AUDUSD catch a bid a jump back above 0.6850 area, the next resistance to watch can be found in the 0.7000 area.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
