Henry Liu
Former FPA Special Consultant
- Messages
- 473
RBA (Reserve Bank of Australia) is expected to keep borrowing costs unchanged in November, as all 22 analysts agree in a survey by Bloomberg… Here’s forecast:
10:30pm (NY Time) AU RBA Rate Decision Forecast 4.75% Previous 4.75%
ACTION: AUD/USD BUY 5.00%
The Trade Plan
If RBA hikes rates, we should jump in (spike trade) and buy AUDUSD or other AUD crosses as the expectation for a rate hike is less than 1%. If RBA decides to keep rates unchanged, we may a sell-off as the accompanied RBA statement may be dovish in light of recent news events.
Important Note: 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
All 22 analysts (surveyed by Bloomberg) agree that RBA will keep rates unchanged. Sydney Futures Exchange is showing less than 1% of chance for a rate hike during this RBA meeting. As a matter of fact, based on Sydney Futures Exchange, there is less than 5% of probability for RBA to hike rates by June of 2011...
Due to recent flood, lower than expected inflationary pressure, and disappointing GDP, RBA is really not in a position to hike rates... With over 1 billion AUD in farm losses, food inflation is expected to pick up in the coming months, which will be another reason for RBA to hold off until the temporary effects of the flood wears off.
Additional Thoughts
I'll be looking for decline in the AUDUSD immediately following RBA's statements. I don't see anything positive out of RBA for the time being, of course, I could be wrong.
Pre-Market Consideration
There will be no pre-news trading today. But if I were to pick a direction, I would be selling AUD.
Historical Chart & Data For RBA Interest Rate Decision
Thanks,
10:30pm (NY Time) AU RBA Rate Decision Forecast 4.75% Previous 4.75%
ACTION: AUD/USD BUY 5.00%
The Trade Plan
If RBA hikes rates, we should jump in (spike trade) and buy AUDUSD or other AUD crosses as the expectation for a rate hike is less than 1%. If RBA decides to keep rates unchanged, we may a sell-off as the accompanied RBA statement may be dovish in light of recent news events.
Important Note: 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
All 22 analysts (surveyed by Bloomberg) agree that RBA will keep rates unchanged. Sydney Futures Exchange is showing less than 1% of chance for a rate hike during this RBA meeting. As a matter of fact, based on Sydney Futures Exchange, there is less than 5% of probability for RBA to hike rates by June of 2011...
Due to recent flood, lower than expected inflationary pressure, and disappointing GDP, RBA is really not in a position to hike rates... With over 1 billion AUD in farm losses, food inflation is expected to pick up in the coming months, which will be another reason for RBA to hold off until the temporary effects of the flood wears off.
Additional Thoughts
I'll be looking for decline in the AUDUSD immediately following RBA's statements. I don't see anything positive out of RBA for the time being, of course, I could be wrong.
Pre-Market Consideration
There will be no pre-news trading today. But if I were to pick a direction, I would be selling AUD.
Historical Chart & Data For RBA Interest Rate Decision
Thanks,
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