Forex News Analysis – RBA Interest Rate 12/05/11
RBA (Reserve Bank of Australia) is expected to cut the borrowing costs to 4.25%, as per general market consensus…
Here´s the forecast for this news release:
10:30pm (NY Time) AU RBA Rate Decision Forecast 4.25% Previous 4.50%
ACTION: AUD/USD SELL 4.25% / BUY 4.50%
The Trade Plan
If RBA decides to keep rates unchanged, we will BUY AUDUSD as today’s decision is not based on unanimous consensus… If RBA cuts rates, we should also see a possibility to SELL as the market will be equally surprised.
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/
The Market
Although most analysts agree that RBA will cut rates during this meeting (13 out of 25 analysts agree on the rate cut), there is a strong possibilitythat RBA may surprise the market by keeping the rates unchanged. As recent inflation data suggests that inflationary pressures have dropped during the month of November, RBA technically has the ammo to justify a rate cut, but then again Gov. Stevens may very well wait until January, making this meeting “too close to call” scenario.
Additional Thoughts
AUD will probably not show much of retracement. However, beware of the “Buy on rumor, Sell on news” market condition should we get an as expected release.
Pre-Market Consideration
I’ll be looking to SELL AUDUSD on any significant gains today in anticipation of a rate cut.
Previous Live Videos:
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Sincerely,
