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

Although the latest lockdown in Perth and earlier mixed economics probe AUD/USD bulls, overall recovery in key fundamentals offer an easy path to the Reserve Bank of Australia (RBA) during Tuesday’s monetary policy meeting, up for publishing around 03:30 GMT.

While RBA policymakers have always shown readiness to act, be it with interest rate cuts or additional Quantitative Easing (QE), the recent shift in the tone towards the positive sentiment seems to have helped the AUD/USD buyers. Even so, mixed data off-late makes today’s interest rate decision the key for the Australian dollar (AUD) traders.

Ahead of the release, Westpac expects further easing with economic optimism as they said,

The Bank may announce an extension of the QE program by a further $100bn at this meeting, but it is more likely to wait until March. The statement is likely to provide references to the updated forecasts to be released in full in Friday’s quarterly policy report.

On the other hand, FXStreet’s Valeria Bednarik said,

Australian policymakers have for long said that the pandemic impact on the economy has been softer than initially anticipated, but this time, they could move one step forward, and provide markets with a more upbeat outlook, given Australia’s privileged situation. Worth noting that is not the time to talk about unwinding facilities. Instead, policymakers may reiterate that they remain opened to add stimulus if necessary, should the situation worsen.

How could the RBA decision affect AUD/USD?

AUD/USD picks up bids near the intraday high around mid-0.7600s ahead of the RBA event on Tuesday. The pair’s latest upside could be traced from China’s readiness to restore positive relations with the US and cautious optimism concerning the American stimulus package. However, traders await the RBA’s comments, amid no rate change expectations, for fresh impulse.

Although economic optimism can derail anticipated addition into the QE, AUD/USD bulls may catch a breather should the RBA sheds its rate-hike bias. On a contrary, any surprise pessimism and/or rate cut odds might not refrain from recalling the bears to attack the five-week-low, flashed last Thursday.

Technically, a 50-day SMA near 0.7600 helps AUD/USD buyers to attack a one-week-old resistance line around the mid-0.7600s. 21-day SMA near 0.7720 offers key resistance.

Key quotes

AUD/USD refreshes intraday high above 0.7600 amid fresh risk-on mood, RBA in focus

Reserve Bank of Australia Preview: Policy on hold, improved economic outlook

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.