When is the RBA Interest Rate Decision and how could it affect AUD/USD?

After announcing the first rate increase in more than a decade, the Reserve Bank of Australia (RBA) is up for another hawkish monetary policy outcome and Interest Rate Decision around 04:30 AM GMT on Tuesday.

The RBA is expected to increase the benchmark interest rate by 25 basis points (bps) to 0.60%, mainly to fight inflation and join the league of its foreign friends.

However, the Aussie central bank will remain behind the likes of the Fed and RBNZ, not to forget the BOE and BOC, which makes today’s RBA rate hike interesting. As a result, the RBA Rate Statement will be more important to watch and forecast near-term AUD/USD moves.

Ahead of the event Westpac said,

On the other hand, FXStreet’s Valeria Bednarik says,

How could the RBA decision affect AUD/USD?

AUD/USD stays pressured around 0.7175 as it prints a three-day downtrend ahead of the key RBA interest rate decision. The Aussie pair’s latest moves could be linked to the market’s anxiety ahead of the RBA’s verdict, as well as firmer yields and the risk-off mood.

That being said, the RBA’s 0.25% rate hike is already known and may not even put the Aussie bank near the other major central banks, which in turn suggests the AUD/USD pair’s likely limited bullish reaction in case of a rate lift to 0.60%. Also challenging the moves could be the looming 0.50% Fed rate increase and fears ahead of the US Consumer Price Index (CPI), as the European Central Bank (ECB) meeting.

Hence, AUD/USD prices may portray a knee-jerk reaction to the 0.25 bps rate hike from the RBA. However, the bears are less likely to relinquish control.

Technically, a clear downside break of the three-week-old ascending trend line, around 0.7240 by the press time, directs AUD/USD bears towards the 20-DMA support near 0.7085.

Key quotes

Reserve Bank of Australia Preview: Rate hikes are here to stay

Australia 10-year Treasury yields, ASX 200 portray pre-RBA anxiety

About the RBA interest rate decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.