Henry Liu
Former FPA Special Consultant
- Messages
- 473
RBA (Reserve Bank of Australia) is expected to keep borrowing costs unchanged in November, as 17 of 23 (73%) analysts agree in a survey by Bloomberg… Here’s forecast:
11:30am (NY Time) AU RBA Rate Decision Forecast 4.50% Previous 4.50%
ACTION: AUD/USD BUY 4.75%
The Trade Plan
If RBA hikes rates, we should jump in and buy AUDUSD or other AUD crosses as the expectation for a rate hike is less than 27%. If RBA decides to keep rates unchanged, we should could a sell-off in the AUD as market would have been pricing in this rate hike since Sunday open. We'll be trading this release using Spike Trade method.
The only time I'd recommend a spike trade is when there are so much momentum pushing this currency that regardless of spread and slippage, you should end up in profit if you just hold on to the trade. For more information on my trading methods, read:
Henry's News Trading Method.
The Market
17 out of 23 analysts agree that RBA will keep rates unchanged. Sydney Futures Exhange is showing about 22% of chance for a rate hike during this RBA meeting, and the December meeting is currently sitting at about 40% chance of a rate hike.
With current quarterly inflation reading dropping, RBA now has the luxury to play a bit of wait-and-see, especially with US FOMC's QE 2 on the horizon. RBA may want to wait for more confirmation before resuming the current tightening policy, as the current overvaluation of AUD is not only buying RBA time, but is doing a superb job in balancing inflationary pressure.
Additional Thoughts
Since we could get a chance either way, 1.) BUY on a hike, or 2.) SELL on an unchanged verdict (possibly), we should be ready to pull the trigger at the time of the release.
Pre-Market Consideration
Market could be buying AUD prior to the release... If AUDUSD dips, I would be inclined to buy.
Historical Chart & Data For RBA Interest Rate Decision
Thanks,
11:30am (NY Time) AU RBA Rate Decision Forecast 4.50% Previous 4.50%
ACTION: AUD/USD BUY 4.75%
The Trade Plan
If RBA hikes rates, we should jump in and buy AUDUSD or other AUD crosses as the expectation for a rate hike is less than 27%. If RBA decides to keep rates unchanged, we should could a sell-off in the AUD as market would have been pricing in this rate hike since Sunday open. We'll be trading this release using Spike Trade method.
The only time I'd recommend a spike trade is when there are so much momentum pushing this currency that regardless of spread and slippage, you should end up in profit if you just hold on to the trade. For more information on my trading methods, read:
Henry's News Trading Method.
The Market
17 out of 23 analysts agree that RBA will keep rates unchanged. Sydney Futures Exhange is showing about 22% of chance for a rate hike during this RBA meeting, and the December meeting is currently sitting at about 40% chance of a rate hike.
With current quarterly inflation reading dropping, RBA now has the luxury to play a bit of wait-and-see, especially with US FOMC's QE 2 on the horizon. RBA may want to wait for more confirmation before resuming the current tightening policy, as the current overvaluation of AUD is not only buying RBA time, but is doing a superb job in balancing inflationary pressure.
Additional Thoughts
Since we could get a chance either way, 1.) BUY on a hike, or 2.) SELL on an unchanged verdict (possibly), we should be ready to pull the trigger at the time of the release.
Pre-Market Consideration
Market could be buying AUD prior to the release... If AUDUSD dips, I would be inclined to buy.
Historical Chart & Data For RBA Interest Rate Decision
Thanks,
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