What happens to the Australian dollar if the RBA doesn’t cut today?

The Australian dollar could strengthen by up to 1% against the U.S. dollar if the Reserve Bank of Australia (RBA) leaves interest rates unchanged at 4.35%, according to analysts at Commonwealth Bank of Australia (CBA).

• “Our analysis of past decisions suggests AUD/USD could lift by up to 1.0% 30 minutes after the decision if the RBA leaves the cash rate at 4.35%,”
• extent of the Australian dollar’s gains will depend on the tone of the RBA’s post-meeting statement and press conference
• If the central bank signals that a rate cut is imminent, any rise in the AUD/USD may be limited.
• However, if the RBA remains noncommittal about future rate cuts, the currency pair could climb by more than 1%

CBA have a long-standing forecast of a rate cut at this meeting today. Most analysts in the market are now forecasting the same. Pricing for a cut is north of 90%. I would be shocked if we didn’t get a rate cut today.

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The RBA Statement is due at 2.30 pm Sydney time

• 0330 GMT
• 2230 US Eastern time

Reserve Bank of Australia Governor Bullock press conference follows an hour later.

• RBA Poised to Reduce Cash Rate by 25 Basis Points
• What technical levels are in play for the AUDUSD through the RBA rate cut in the new day?
• Nomura expect a hawkish rate cut from the Reserve Bank of Australia this week
• Reserve Bank of Australia expected to cut its cash rate by 25bp on February 18
• Market Outlook for the Week of 17th-21st February
• Newsquawk Week Ahead: RBA, RBNZ, FOMC Minutes, PMIs, Canada, UK and Japan inflation

Reserve Bank of Australia Governor Bullock

This article was written by Eamonn Sheridan at www.forexlive.com.