Forex Signal (Tue May 3 2011, 12:30am NY Time EST) - AU RBA Rate Statement

Henry Liu

Former FPA Special Consultant
Messages
473
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 Statement 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, please read:
Henry Liu's Trading Method


The Market
Most analysts agree that RBA will once again keep rates unchanged at 4.75%, but a positive Q1 CPI report and the tendency of governor Stevens to surprise the market, there is still a possibility for a rate hike to 5%. The RBA meeting and outlook for the future will surely set the tone for the local market.

Additional Thoughts
Governor Stevens is likely to keep rates unchanged. 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.

Historical Chart and Data for AU RBA Rate Statement




Thanks,


 
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