First off, the RBA will announce no change to the cash rate target. It is at 2.5% and will remain there.. In that sense, this is not a ‘live’ meeting.
Attention will turn, then, to the accompanying statement. The RBA cemented their bias to neutral at the previous meeting, and that is unlikely to change. They are now in ‘wait and see how the data behaves’ mode. The statement may, however, express some concern about the level of the Australian dollar … they are not likely to say that it is too high, but they may say they do not wish to see it gain ground from here. One thing for sure, they won’t talk it up. The RBA will be cognizant of the likely impact on the AUD of further Fed ‘tapering’ (i.e. a negative input for the AUD). This is likely to be a nuanced statement.
So, what about the A dollar? It had a good fall last week and is now encountering bids from longer-term timeframe traders (central banks buyers is the chatter, still, as well as long timeframe carry traders). 0.8850 and around 0.8900 are the initial bid levels. The recent fall has left shorter-timeframe traders short, some of this is being unwound as the AUD jogs sideways. Further stops above 0.8950 initially (I’ll have an orderboard posted soon).
