Forex Signal (Mon. November 1 2010, 11:30pm NY Time EDT) - RBA Interest Rate Decision

[Henry Liu]

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,

 

[adams1]

What about when rate is reduced?

Hi Henry,
I am very grateful for your post, you have been a tremendous help to me.What will I do if the rate is reduced?
I will be very grateful if the answer to the above question is given to me.

Warmest regard
Adamson Erha

 

[Punle]

Did anybody make the trade and thus has a good broker to propose? I use Etoro and they froze the pair just before the new was given. How frustrating.

 

[moshood olaniyi]

am pat

thanks for all your wonderful news post. can you remain there for live. love you.

 

[gunner12]

Did anybody make the trade and thus has a good broker to propose? I use Etoro and they froze the pair just before the new was given. How frustrating.

managed to make a trade. But I use IGMarkets and they froze the pair as well. Trade was made blind...but managed +30pips.

 

[DumbAsArock]

Hello Henry,

Thanks for sharing your ideas. I'm grateful.

May I suggest you slow down a little and double check your posts? I'm not complaining, but this is the fourth instance in a week where you've contradicted yourself -- said buy when you meant sell, or vice-versa.

For this signal you've got it listed as both an afternoon and evening trade.

I'm not being critical, only requesting you edit your writings prior to posting them.

Again, thanks for sharing your expertise.