Australian Dollar Cross Pick 04.02.2012

Although we’re still sitting on the sidelines with AUDNZD, we may see the pair extend the sharp decline from March as the Reserve Bank of Australia interest rate decision comes into focus. Market participants anticipate the Reserve Bank of Australia to keep the benchmark interest rate at 4.25% in April, but the policy statement could drag on the exchange rate should the central bank talk up speculation for a rate cut. Indeed, the AUDNZD looks poised for a near-term correction following the recent string of declines, but we will be keeping on the relative strength index as it slips into oversold territory. A dovish policy statement should heighten the bearish sentiment underlining the Australian dollar, and we may see the downward trend gather pace until the RSI climbs back above 30.