Never miss a story from Dimitri Zabelin

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Dimitri Zabelin

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

TALKING POINTS– RBA RATE DECISION, AUD/USD, US ECONOMIC DATA

  • RBA holds cash rate at 1.50% as anticipated
  • Aussie swung, then fell with local bond yields
  • AUD/USD eyeing US data, which may disappoint

See our free guide to learn how to use economic news in your trading strategy!

AUDUSD violently swung between both ends of the candle and then fell alongside bond yields following the release of the RBA interest rate decision to hold rates at 1.50 percent. The monetary policy statement was left relatively unchanged from March’s release, though hints that inflation and improvement in key economic indicators will be slow and gradual.

AUD/USD – Daily Chart

Chart Showing AUDUSD

The RBA also stated that growth has slowed down and that the “downside risks have increased” with a nod to deteriorating international trade relations. The central bank also omitted a line from March's statement alluding to how a rise in household income was expected to support consumption over the next year. The removal of this expectation signals a potential key vulnerability in the economy.

Concerns over slower global growth may also be another key factor that may weigh down on the cycle-sensitive Australian Dollar and force policymakers to have a more dovish disposition. The overall tone of the RBA strikes a pessimistic and cautious approach to policy relative to the last meeting. Overnight index swaps are now pricing in a 72 percent probability of a cut by the end of the year.

Looking ahead, AUD/USD will be eyeing key US economic data. Changes in non-farm payrolls will be a key point of interest because of the significant impact it may have on Fed monetary policy expectations. According to the Citi Economic Surprise Index US economic data has been tending to underperform relative to economist’ expectations. Fears over slower growth in the world’s largest economy could induce risk aversion and weigh on the Australian Dollar.

FX TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter