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

After announcing consecutive eight rate increases so far, the Reserve Bank of Australia (RBA) is up for another hawkish monetary policy outcome, despite teasing doves of late, during the scheduled Interest Rate Decision of around 03:30 AM GMT on Tuesday.

The RBA is expected to carry out the slow and steady interest rate hike by lifting the benchmark interest rate by 25 basis points (bps) to 3.35%, the third such in a row.

Given the recently mixed statements in the RBA minutes and a contrasting play between inflation and growth numbers, the AUD/USD traders will be more interested in hearing about the end of the rate hike trajectory, making this event crucial.

Ahead of the event, Westpac said,

On the same line, FXStreet’s Valeria Bednarik said,

How could the RBA decision affect AUD/USD?

AUD/USD picks up bids to renew intraday high around 0.6900 amid the market’s cautious optimism during early Tuesday. The quote’s recent recovery takes clues from headlines that suggest easing fears of the US recession woes, as well as improvements in the Aussie-China ties. In doing so, the Aussie pair also cheers the pullback in the US Treasury bond yields and the US Dollar ahead of the key RBA, as well as Fed Chairman Jerome Powell’s speech.

That said, the RBA is up for 0.25% rate hike but can surprise the bulls with a 0.50% rate lift, considering the inflation woes. The same teases the AUD/USD bulls ahead of the event. That said, the headline Consumer Price Index (CPI) marked stellar numbers on a quarterly and monthly basis but the Aussie economic growth appears to lag the 3.0% RBA forecasts for 2022.

Should the RBA shows readiness to pause the rate hike trajectory from the next meeting, the AUD/USD may have a further downside to trace. However, the need for more rate lift could allow the quote to extend the latest rebound.

Technically, a convergence of the 50-DMA and 61.8% Fibonacci retracement level of the June-October 2022 downturn, around 0.6860 by the press time, defends the AUD/USD bulls. However, bearish MACD signals and a sustained closing below the three-month-old previous support line, close to 0.6930 by the press time, keep the Aussie bears hopeful.

Key quotes

Reserve Bank of Australia Preview: Hinting toward an end to its rate hike cycle?

AUD/USD grinds above 0.6860 key support on softer Aussie trade surplus, RBA, Fed’s Powell eyed

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 of the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.