Τhe Reserve Bank of Australia has hiked the cash rate by 50 basis points to 1.35% at Tuesday’s meeting, according to the latest Reuters poll , and will likely maintain its policy guidance from June.
The RBA minutes after the June meeting indicated they would consider 25 or 50 bps hikes, but when RBA Governor Philip Lowe recently predicted inflation would hit 7.0% by the end of the year, the market locked in expectations of a 50-bps hike.
The statement is likely to repeat the June comments that they expect to “take further steps in the process of normalizing monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labor market.”
If the RBA meets market expectations with a 50-bps hike, the AUDUSD reaction will be muted and short-lived. Worldwide growth expectations, along with moves in commodity and equity prices, will have a greater impact on the direction of the currency.
The AUD/USD is trending lower, as the five, 10 and 21-day moving averages are aligned in a bearish shape and heading down. Selling rallies is the favored strategy for AUD/USD bears and trend followers.
Warning:
Trading on CFDs involves a high level of risk, including full loss of your trading funds. Before proceeding to trade, you must understand all risks involved and acknowledge your trading limits, bearing in mind the level of awareness in the financial markets, trading experience, economic capabilities and other aspects.
Disclaimer:
Market Trends, Charts, Trading Ideas or other information provided by BKFX (Pty) Ltd and/or third parties are not intended as an investment advice and/or recommendation. The information provided is not presented as suitable or based on your specific need. You are responsible for your own investment decisions and you should not trade with money you cannot afford to lose. Any views or opinions presented in this Article are solely those of the author and do not necessarily represent those of the Company, unless otherwise specifically stated. The Company may provide the general commentary which is not intended as an investment advice and must not be construed as such. Seek advice from a separate financial advisor if an investment advice is needed. The Company assumes no liability for errors, inaccuracies or omissions, inaccuracies or incompleteness of information, texts, graphics, links or other items contained within this article/material.