Aussie Trades Slightly Lower Ahead of RBA’s Cash Rate Decision, 30+ PIP Volatility Likely; May 04, 2021
Reserve Bank of Australia (RBA) Interest Rate Decision
The RBA has scheduled to release key Interest Rate Decision at 0430 GMT/1000 IST. The rate decision is usually priced into the market, so it tends to be overshadowed by the RBA Rate Statement, which is focused on the future. Short term interest rates are the paramount factor in currency valuation – traders look at most other indicators merely to predict how rates will change in the future. On the other side, RBA’s Rate Statement is among the primary tools the RBA Reserve Bank Board uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions.
Today RBA is more than likely to keep the cash rate, and other key policies, at a record low 0.1 per cent. RBA Governor Philip Lowe is expected to repeat that interest rates will not rise until inflation is back in the two to three per cent target band, an event it does not see happening until 2024. On the other side, Western Australia was under threat of a renewed lockdown. Hence possibilities are there that the RBA might continue with their dovish tone and weigh on the currency. Let’s see what Policy Statement brings for us and AUD too. Any changed in the growth forecast will provide further directions to the economy and currency too.
Let’s see how AUD has reacted during the previous data release:
AUD/USD: The Aussie trades marginally lower ahead of RBA’s cash rate decision and hovers around key support at $0.7740 mark. The pair made intraday high at $0.7763 and low at $0.7741 mark. A sustained close above $0.7770 on H1 requires for the upside rally. Alternatively, a consistent close below $0.7722 will check further supports.
Key Resistances: $0.7770, $0.7790, $0.7812, $0.7832, $0.7854
Key Supports: $0.7722, $0.7702, $0.7677, $0.7640, $0.7610
Take a look and do trade wisely!