Strategy Video: AUDUSD and AUDJPY Stand at Critical Support Ahead of RBA
• The RBA rate decision is this week's top, scheduled monetary policy event
• Market-derived swaps show a 75 percent probability of a 25bp cut, but Economists are far less convinced
• At the last RBA cut (February 3), there was a notable lack of follow through on AUD selling
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Monetary policy divergence has proven the FX market's top source of trend generation. That marks the upcoming RBA rate decision as a critical event. Where most central banks have already established their policy bearings and are simply rolling over their QE programs or holding steady, the Reserve Bank of Australia is one of the few that is still pulling levers. For this upcoming gathering, speculation in the market is running high (75 percent probability) that a further reduction to a record low 2.00 percent will be realized. With pairs like AUDUSD, AUDCAD and AUDJPY standing on the cusp of critical support levels; a spark like this could prove a capable driver. Then again, looking back to the February 3 RBA cut; volatility didn't translate into meaningful trend. We discuss this important event and its market potential in today's Strategy Video.
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