On Tuesday the Reserve Bank of Australia are going to release their Interest Rate and Bank Rate Statement which will be a major fundamental driver for the Australian dollar this week.
We all have been anticipating for the RBA to cut their rate in April 7 meeting despite the fact that retail calendar around the globe says that there’s no expectation for a rate or hike.
The institutional markets are actually pricing an 80% chance of RBA cutting their rates. So if it will happen it won’t be that much of a surprise. So please don’t get too ecstatic to try to over sell AUD in the event of a rate cut and following that because the downside move is mostly already happened, most investors have already sold the rumor.
We expected it to get to 0.75 region or maybe even break 0.75 but don’t be looking to try to make two hundred pips just on the fact that they’ve cut their rates. If there will be a big move down it will be based on the RBA rate statement.
If the RBA cut their rate and make it really clear that they are going to cut more in the next coming meetings in their rate statement, they are going to be really dovish, then AUD could fall further. But if they say “it’s ok for now”, we could actually see the downside towards the dollar being very limited.
The other side of the coin is, that if they will not cut it will be a big surprise on the markets and we could see some nice upside on the AUD/USD.