In Australia, the RBA meets on Tuesday at 04:30 GMT. A change in the monetary policy is expected amid softer Q1 inflation and a slowing economy. The RBA’s Statement on Monetary Policy will be published on Friday.
Markets have been factoring in a high probability for the RBA cutting its cash rate by 25 bp at its policy review since the release of Q1 CPI, which came at 0.0% q/q. The CPI y/y rate came in at 1.3%, down sharply from 1.8% y/y in Q4, while underlying CPI was the lowest on record, at 1.4% y/y. The RBA targets underlying CPI at 2%-3%. The trimmed mean inflation rate came in at 1.6% y/y, down on the RBA’s February forecast for this metric to reach 1.8% by June.
The data had catalysed calls for the RBA to cut interest rates with many bank analysts also calling for a follow-up easing by August. The RBA stated in April that a rate cut “would be appropriate” should inflation remain weak. Meanwhile as per the Reuters Eikon terminal below, OIS pricing is now discounting about a 60.81% probability for a 25 bp cut in the cash rate at tomorrow’s RBA policy meeting, and is fully discounting such a move by June.
The Australian Dollar, was observed to have remained in the range it has been in over the past two years, however it has been seen in a continuous depreciation since January 2018. AUDUSD has dropped over 14% since then, while further losses could suggest a retest of 4-year low area, at the 0.68 territory. Fundamentally, a rate cut could suggest the strengthening of the bearish bias for Aussie.
Click here to access the Economic Calendar
HFcopy service from HotForex Broker
Why Reading Analyses is Useful for Trading
Labour Market Data – Complete Guide
HotForex Mobile App Review
Shutdown and its jobs and trade impact
Which Moving Average Should I Use? – Part I
Which Moving Average Should I Use? – Part II
For all Articles related to HotForex please click here