Reserve Bank of Australia (RBA) board members are expected to come to a consensus on where to set the rate on Tuesday. Traders to watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
Dovish is the opposite of hawkish. This is when an economy is not growing and the government wants to guard against deflation, which is a decrease in the cost of goods and services.
A higher than expected rate is positive/bullish for the AUD, while a lower than expected rate is negative/bearish for the AUD. The pair has been ranging for a while around 0.68238 (top) to 0.66787 (bottom) providing humongous expectations for big moves this Tuesday.
It seems as though the RBA will largely endorse a wait-and-see approach as Governor Philip Lowe insists “the exchange rate has become the great stabiliser of the Australian economy, arguably playing a more important role than monetary policy in dealing with the major shocks that we have experienced over recent times.” The central bank has been offering a back to back rate cuts since Feb and with other factors, Aussie has been bearish ever since against the dollar. The track record form the previous rate cuts make analysts project that the same will happen to make price action to fall to 0.66212’s.
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