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Forex Signal (Tue July 5 2011, 12:30am NY Time EST) - AU RBA Interest Rate

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jul 4, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    RBA (Reserve Bank of Australia) is expected to keep borrowing costs unchanged at 4.75%, as per the wide market consensus…

    Here´s the forecast for this news release:

    12:30am (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 very unlikely. If RBA decides to keep rates unchanged, we may see 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 Liu's News Trading Method

    The Market
    Most analysts agree that RBA will keep rates unchanged during this meeting, however, there is a possibility that rate will rise to 5.25% by the end of 2011, according to a survey by Bloomberg.

    With recent Core CPI remaining in target, it is likely that RBA will take its time before hiking rates, especially considering Greece situation, recent Retail Sales number, and of course, China's drop in manufacturing and inflation.

    Furthermore, “Our most recent analysis, as published in early May, concluded that the underlying rate of inflation is more likely to rise than fall over the next couple of years,” Stevens said June 15. “This central expectation -- subject to all the usual uncertainties inherent in forecasting -- suggests, as we said at the time, that ‘further tightening of monetary policy is likely to be required at some point for inflation to remain consistent with the 2-3 percent medium-term target’,” the RBA Governor said in Brisbane, which caused AUD to drop immediately as expectation for further rate hike diminished.

    Additional Thoughts
    Governor Stevens is likely to keep rates unchanged, this time. Fundamentally, with AUD appreciating to the highest levels in decades offsetting any inflationary pressure, RBA is not in any hurry to hike interest rates any time soon.

    Pre-Market Consideration
    There will be no pre-news trading today. But if I were to pick a direction, I would be selling AUD from the top...

    Historical Data & Chart for RBA Interest Rate


    Sincerely,


    [​IMG]
     
    #1 Henry Liu, Jul 4, 2011
    Lasted edited by : Sep 8, 2016
  2. Callen

    Callen Recruit

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    Thank you again for your valuable insight.

    So Henry, if the interest rates remains at 4.75% we are expecting to short AU?
     

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