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

RBA interest rate decision review

While all expect the RBA to stay on hold at 1.5% for a 14th consecutive meeting, due at 03:30GMT, the wording in the statement will be analysed for any shifts in outlook for policy and the domestic/global economy. Key domestic data have improved, including a modest pickup in the labour market, as well as Q2 GDP printing broadly in line with the RBA's forecasts.

Markets are pricing in the likelihood of hikes in 2018 but analysts at Westpac remain of the view that rates are on hold. Also, global PMI's have been at worst pretty much in line and at best, like what we saw in today's US beat in PMI and the recent official Chinese NBS manufacturing PMI for September, very strong rising and to the highest level since 2012. The Aussie is off its recent highs but could well still get a mention. 

How could the RBA decision/statement affect AUD/USD?

A particular focus will be on the RBA's outlook for monetary policy going forward and indeed the strength of the Aussie. Traders will be looking for any differences in the statement and for any emphasis on some of the not so positive sides to the Aussie economy since the previous meeting, such as a worsening manufacturing activity and declining inflation expectations. However, outside of all of that, analysts at ANZ argue that the AUD is unlikely to get much momentum out of the RBA meeting this week as the statement will remain largely unchanged.

The Aussie has been on a stronger footing at the start of this week leading into the meeting, but risks are skewed to the downside on a more dovish tone. The Aussie could start to resume its trajectory from YTD 0.8125 highs to below the 0.78 handle, eyeing 0.778, the mid-July low.

Key notes

• China: PMI to head lower, no hard landing - Danske Bank
• AUD/USD analysis: RBA and Caixin services PMI take center stage
• AUDUSD Trading Setup
• AUD/USD analysis: bearish ahead of RBA monetary policy announcement

About the RBA interest rate decision 

The 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.