RBA interest rate decision

RBA will announce its interest rate decision during tomorrow’s Asian session (04:30 GMT) and is expected to remain on hold at +1.50%. Currently, AUD OIS imply a probability for the bank to remain on hold of 99.67%. As the interest rate is expected to remain on hold, market focus could turn to the accompanying statement. Comments could be raised about the inflation rate, as it accelerated to +2.1% yoy for Q2 of 2018, and broke the lower threshold of RBA’s inflation target range of +2.00% yoy to +3.00% yoy. With an accelerating inflation rate as well as the retail sales growth rate and at the same time a rather low unemployment, the accompanying statement could have a more hawkish tone and support AUD, while on the other hand international trade tensions could increase uncertainty somewhat.

AUD/USD continued its sideways movement on Friday, touching the 0.7410 resistance line. We could see the pair continue its sideways movement with some bullish tendencies as the market may position itself ahead of RBA’s interest rate decision. Should the pair come under buying interest we could see it breaking the 0.7410 resistance level and aim for the 0.7440 resistance area. On the other hand, should the pair come under selling interest we could see it breaking the 0.7370 support line and aim for the 0.7345 support area.