Morning View: RBA. Will They?

April 7, 2015

Morning Recap:
So, what do you think?

Rising unemployment – check.
Slowing growth – check.
Commodity prices falling – check.

The cut is coming, but is it April or May? It’s tough for the RBA because they have to balance the above checklist with the risk of flaming the ever booming Sydney housing market if they cut too hard.

Markets have all but priced in a 0.25% cut, but the surveyed economists are tipping the RBA to hold off on the cut for one more month.

The way I’m looking at it is that a lot of the cut is already priced into currency markets. The trading opportunities will be in the market moving back to ‘fair’ if we get the unexpected. As always, keep it simple. Watch the major levels on your charts and manage your risk around them.

On the Calendar Today:
Although we have Retail Sales data to be released this morning from Australia, all eyes will be on the RBA rate decision later this afternoon.

For anyone trading the GBP, the services PMI data out of the UK is worth keeping an eye on, as well as any election related headlines.

Tuesday:
AUD Retail Sales
AUD Cash Rate
AUD RBA Rate Statement

GBP Services PMI

Chart of the Day:
On RBA day, we have to take a look at the Aussie Dollar. We took a look at the AUD/USD chart in yesterday’s Morning View, so let’s take a look at some of the other AUD crosses.

AUD/NZD Daily:
antue
Click on chart to see a larger view.

AUD/NZD has been racing towards parity over the last few weeks and got within 20 pips yesterday before buyers came in just above the major psych level.

This is an interesting spot heading into the cash rate decision because on the daily price has printed a bit of a doji candle which could add to buying confidence if the RBA decide to hold. On the other side, if the RBA cut, a single daily candle won’t make any difference.

AUD/JPY Weekly:
ajtue
Click on chart to see a larger view.

I’ve zoomed right out to the weekly chart on AUD/JPY to show the channel support level that price is still poised on.

Once again, this is possibly a good level to see some downward momentum come through if we get a cut and start clearing some stops below the channel.

Are you expecting the RBA to cut or keep rates on hold for another month? Leave a comment below or mention @VantageFX on Twitter.

Dane Williams – @VantageFX

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