AU RBA Interest Rate Decision today is expected to cut again by 25 basis points, and of course,RBA surprised the market by cutting rates during the last meeting when even the most bearish of analysts were calling for an unchanged decision. If RBA cuts 50 basis points today, we should see plenty of selling pressure; on the other hand, if RBA decides to keep rates unchanged, then AUD will be in strong demand. At any rate, we’ll follow the plan below.
Here´s the forecast for this news release:
10:30am (NY Time) AU RBA Interest Rate Decision Forecast 2.00% Previous 2.25%
DEVIATION: 0.25% (SELL AUD 1.75% / BUY AUD 2.25%)
The Trade Plan
If RBA decides to cut interest rate by 50 basis points, we sell AUD… If RBA decides to keep rates unchanged, we’ll buy AUD as market is expecting a rate cut today. Ultimately we are a bit bearish on the AUD as AUDUSD has shown certain degree of selling pressure and should continue after today’s rate decision, especially considering recent inflation outlook out of Australia…
Important Note: The only time I´d recommend a spike trade is when there are so much momentum pushing this currency that regardless of spread and slippage, you should end up in profit if you just hold on to the trade. For more information on my trading methods, read: https://www.currencynewstrading.com/how-to-get-started-with-news-trading/
I’d recommend to use the Recommended Pairs from above as they are based on my CSM, which should provide the best combination of currency pairs to trade based on better/worse news… of course, you can also trade the default pair: AUDUSD.
Outlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.
Australian RBA interest rate is often refers to as the “cash rate target”, also called the official cash rate (OCR) or cash rate. This is the Australian base rate. Banks pay this interest rate when they take out a loan with a maturity of 1 day from another bank. By buying or selling bonds and other securities issued by the government the RBA can influence the money supply and thus the cash rate target. A rise or fall in the cash rate often also leads to a change in the interest rates for mortgages, loans and savings.