When is the RBA Interest Rate Decision and how could it affect AUD/USD?

Alike every first Tuesday of the month, the Reserve Bank of Australia (RBA) is up for conveying the latest monetary policy meeting and Interest Rate Decision around 04:30 AM GMT.

While the Aussie central bank isn’t expected to alter its monetary policy, making a non-event, comments from the Rate Statement will be the key to watch for AUD/USD traders.

That said, recent fundamentals from Australia dwindle following a snap lockdown in victoria and mixed clues concerning Asia-Pacific markets, mainly due to the coronavirus (COVID-19). Even so, the RBA policymakers have been upbeat of late while signaling action in July.

Australia and New Zealand Banking Group (ANZ) follows market sentiment while saying,

We think today’s RBA decision will be pretty uneventful. The Bank may reference the recent lockdown in its policy statement as a reminder that downside risks to the economic outlook remain. We don’t expect its policy message to change from that in May, nor for there to be any hints about the July decisions on the fate of the yield target and quantitative easing. Governor Lowe may use a speech on 17 June to outline the RBA’s thinking on the fate of these policies.

On the same line, FXStreet’s Valeria Bednarik said,

Comparisons are awful, but the New  Zealand Central Bank had a monetary policy meeting last week, and analysts dictated it was a “hawkish” one. Australian policymakers have been generally optimistic despite cautious, but the main question is if the RBA could be as hawkish as the RBNZ. Most market participants do not believe it would be possible. Hence, the AUD can fall in a non-event meeting.

How could the RBA decision affect AUD/USD?

AUD/USD cheers broad US dollar weakness to battle a three-week-old resistance line ahead of the RBA decision. Also favoring the quote could be the early Asian economics comprising PMIs from China and Australia, as well as Aussie Building Permits. It should, however, be noted that the US Treasury yields are on the front foot and may trigger the US dollar rebound.

That said, today’s RBA will be observed on the strength of bullish economic outlook and hints for July moves considering the latest snap lockdown in Victoria. May month’s RBA minutes made it clear that the policymakers have shunned bearish bias and may alter the asset purchase rather than the yield curve adjustments as the first step towards policy adjustments. Though, it all depends upon how well the Oz nation overcomes the coronavirus (COVID-19) pandemic. Above all, today’s event is likely to be a non-event in case the RBA refrains from any key signals and matches the market consensus of inaction.

Hence, Bullish comments from RBA will help the quote rise further towards the 0.7800 threshold whereas any disappointment could justify the immediate hurdle around 0.7760, comprising three-week-old resistance line and 21-day SMA, by dragging AUD/USD prices to a confluence of 100-day SMA and the monthly rising trend line offers short-term key support near 0.7710.

Key quotes

Reserve Bank of Australia Preview: No fireworks as the focus is on July’s meeting

AUD/USD keeps running towards 0.7800 ahead of RBA

AUD/USD: Recovery moves capped around 0.7750 with eyes on RBA

About the RBA interest rate decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.