{"id":164349,"date":"2020-02-03T13:50:57","date_gmt":"2020-02-03T18:50:57","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=164349"},"modified":"2020-02-03T11:51:39","modified_gmt":"2020-02-03T16:51:39","slug":"what-will-the-rba-do-tomorrow","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/02\/what-will-the-rba-do-tomorrow\/","title":{"rendered":"What Will The RBA Do Tomorrow?"},"content":{"rendered":"
February 3, 2020<\/div>
\r\n<\/div><\/div>

By <\/strong>Orbex<\/strong><\/a><\/p>\n

So far this year, the AUD has been on the backfoot, retreating compared to most other currencies.<\/p>\n

There are several reasons, as usual. Some of them are completely unexpected (coronavirus<\/a>) while others were projected ahead of the last RBA meeting. Now the question is how far that trend will continue.<\/p>\n

The next step is coming up tomorrow. The RBA is meeting for the first time this year to set its monetary policy.<\/p>\n

A rate cut would likely continue that descending trend, on the back of disappointing economic performance and worries that what green shoots there are, won\u2019t last. But, what are the chances of that happening?<\/p>\n

What We Are Expecting<\/strong><\/h2>\n

The latest survey of international economists shows that three-quarters of them are expecting the RBA to hold rates. That\u2019s a pretty strong consensus! But, when only Australian economists are polled, the confidence goes up to 87%.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

In fact, the market has been pricing in a rate hold all last week. The balance is showing just a 14% chance of a rate cut as we emerge from the weekend. The rationale is that the central bank is happy with the latest employment data, and doesn\u2019t want to rock the boat yet.<\/p>\n

With the markets pricing in the RBA keeping everything on hold, the rate decision itself is likely to not move the market much. That is, of course, unless there is a surprise.<\/p>\n

Apparently, that would also surprise Governor Lowe, since no post-policy-change press release is scheduled.<\/p>\n

All Hail the Rhetoric<\/strong><\/h2>\n

What\u2019s likely to influence the market the most is the rate statement that comes out at the same time as the decision.<\/p>\n

Traders are going to want to know if there are any changes in outlook. The market is likely to be reassured if the statement repeats three important ideas:<\/p>\n

    \n
  1. That interest rates will stay low for an \u201cextremely long time\u201d<\/li>\n
  2. That unconventional measures are not necessary, and traditional policy is \u201cworking\u201d<\/li>\n
  3. That the RBA is \u201cassessing growth momentum\u201d<\/li>\n<\/ol>\n

    It\u2019s not likely the first will change, but potential changes in wording that might move the markets include that:<\/p>\n

      \n
    1. Conventional measures are being considered or might be necessary<\/li>\n
    2. The RBA is considering policy changes, instead of simply assessing momentum, or potentially giving a parameter for what they consider sufficient growth<\/li>\n<\/ol>\n

      The markets would likely interpret both of those changes as dovish. And this would likely weaken the AUD.<\/p>\n

      On the other hand, if everything remains the same, it puts off for a month the potential of RBA-driven weakness in the AUD and could provide some support.<\/p>\n

      Going Forward<\/strong><\/h2>\n

      Analyst evaluations remain the same. They conclude that a rate cut by the RBA is likely in the first quarter of the year, but that it won\u2019t happen until the next meeting at the earliest.<\/p>\n

      In that respect, Thursday\u2019s Retail Sales might have more weight on the direction of the currency, since the market is likely waiting until after the meeting to price in the expectations for that data.<\/p>\n

      By <\/strong>Orbex<\/strong><\/a><\/p>\n

       <\/p>\n","protected":false},"excerpt":{"rendered":"

      By Orbex So far this year, the AUD has been on the backfoot, retreating compared to most other currencies. There are several reasons, as usual. Some of them are completely unexpected (coronavirus) while others were projected ahead of the last RBA meeting. Now the question is how far that trend will continue. The next step […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-164349","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164349","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=164349"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164349\/revisions"}],"predecessor-version":[{"id":164364,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164349\/revisions\/164364"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=164349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=164349"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=164349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}