Trading the News: Reserve Bank of Australia Interest Rate Decision
What's Expected:
Time of release: 05/03/2011 4:30 GMT, 0:30 EST
Primary Pair Impact:AUDUSD
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Expected: 4.75%
Previous: 4.75%
DailyFX Forecast: 4.75%
Why Is This Event Important:
Although the Reserve Bank of Australia is widely expected to hold the benchmark interest rate at 4.75% in May, the central bank may strike a hawkish tone for future policy as price pressures intensify, and the statement accompanying the rate decision could push the AUD/USD to a fresh record high as currency traders expect to see higher borrowing costs over the coming months. According to Credit Suisse overnight index swaps, market participants are pricing a zero percent chance for a rate hike this time around, but see the interest rate increasing by at least 25bp over the next 12-months as growth and inflation accelerate. However, as the region copes with the natural disasters that ravaged throughout the region, the central bank may retail a neutral tone going into the second-half of the year, and the aussie-dollar may consolidate in the days ahead as it remains heavily overbought.
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