When is the RBA Monetary Policy Statement and how could they affect AUD/USD?

The Reserve Bank of Australia (RBA) will release its quarterly Monetary Policy Statement (MPS), also known as the Statement of Monetary Policy (SoMP), at 01:30 GMT on Friday.

The Aussie central bank’s two consecutive inactions join the latest retreat in inflation and unimpressive growth numbers highlight today’s RBA MPS as the key event for the AUD/USD traders. It’s worth noting that RBA Statement showed readiness to lift the rates if needed while pushing back the rate cut bias, which in turn makes today’s RBA SoMP more important for the pair traders.

Analysts at ANZ provide details of catalysts worth watching in the statement:

If the Reserve Bank moves in the near term (or even in the first half of 2024) higher interest rates are more likely than cuts. That message was conveyed in the post-meeting statement via: “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks”. Today’s Statement on Monetary Policy (SoMP) will provide additional detail on how the RBA is viewing the economy and its outlook.

How could it affect AUD/USD?

AUD/USD picks up bids to extend the previous day’s recovery from the lowest level in two months ahead of the RBA Monetary Policy Statement. The Aussie pair’s latest rebound could be linked to the preparations for not only the likely pullback in prices post-RBA MPS but also an anticipated downturn after the US jobs report, mainly due to the upbeat early employment signals. Furthermore, a retreat in the US Treasury bond yields from the worrisome levels also allows the AUD/USD to remain on the front foot.

However, challenges to the RBA hawks are more than the latest corrective bounce, even if the policymakers hesitate in accepting the fact. Should the RBA MPS unveil economic hardships for the Pacific major, the Aussie pair may witness a fresh downside and reverse the previous day’s recovery from the multi-day low.

Even so, the likely reaction to the RBA SoMP appears muted, unless witnessing a drastic change in the statement than the market’s expectations, as traders are more interested in the risk catalysts and the US employment report for July.

Technically, an upward-sloping support line from mid-October 2022, around 0.6540 by the press time, defends the AUD/USD pair buyers even if the corrective bounce appears elusive below late June’s low of near 0.6600.

Key notes

AUD/USD grinds at two-month low around 0.6550 as RBA Monetary Policy Statement, US NFP loom

AUD/USD Forecast: Insufficient rebound, still under pressure

About RBA Monetary Policy Statement

The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negative (or bearish).