Reserve Bank of Australia is likely to keet interest rates unchanged

By TraderVox.com

Tradervox.com (Dublin) – The Reserve Bank of Australia is expected to leave the rates unchanged at its next meeting. The bank had reduced the interest rate in November and December but still remains the highest interest rate among the developed nations. However, according to Credit Suisse Group AG Index, traders are expecting a 0.74 percent cut on overnight swap rate. 

The speculation about the interest rate remaining unchanged and the favorable factory data from US have led to an increase in the value of the Australian dollar ahead of the meeting. The Aussie gained against most major currencies. The Australian dollar registered its highest intraday rise against the dollar after the US factory data reported and expansion from 52.4 in February to 53.4 in March. This is a higher than expected expansion as most analysts were expecting an expansion to 53. The New Zealand dollar also rose against the US dollar after the US manufacturing data was released.

The Australian dollar rose by 0.7 percent to exchange at $1.0419 from its opening day trading level of $1.0418. The Aussie registered an increase of about 1.2 percent against the greenback yesterday, which is the highest intraday increase since January 25. The other south pacific dollar –the Kiwi, was gaining against the greenback adding 0.6 percent to sell at 82.34 US cents.

There is a discrepancy in the expectation of traders and analysts on whether the RBA will hold its interest rate or it is going to reduce it. Most analysts are saying that the RBA meeting will resolve to hold the interest rates while a survey on traders’ sentiments indicate that they expect the RBA to reduce the interest rate by 74 basis points.

The Australian dollar is almost to six months low against the New Zealand dollar as traders expect the result of the RBA meeting today. The Australian dollar fell by 0.1 percent against the kiwi to exchange at NZ$1.2641 at early trading in Sydney. The Aussie was weakened against the yen by 0.3 percent to trade at 85.30 yen. The Aussie has also continued with its advance against the greenback adding 0.1 percent to trade at $1.0425.

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