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

After more than a decade of holding the benchmark interest rate unchanged, the Reserve Bank of Australia (RBA) is up for conveying the likely 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 15 basis points (bps) to 0.25% in the upcoming move, 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,

Given the strength of the labor market and inflation, the RBA is expected to announce the start of the tightening cycle at the May meeting. Westpac anticipates an increase of 15bps to 0.25%.

On the other hand, FXStreet’s Dhwani Mehta says,

A 15 bps rate hike is well priced-in by the market. Therefore, the Aussie will need more than the given rate increase to stage any meaningful recovery beyond 0.7100. AUD bulls could receive the much-needed boost if the RBA front-loads rate hike prospects for this year, affirming markets’ expectations of 1.50% by end-2022.

How could the RBA decision affect AUD/USD?

AUD/USD bulls approach 0.7100 while extending the bounce off a three-month low during the pre-RBA run-up. The pair’s latest advances could be linked to the hawkish hopes from the RBA, as well as the US dollar’s pullback amid an absence of bond moves, due to holidays in Japan and China.

That being said, the RBA’s 0.15% 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 0.25%. Also challenging the moves could be the looming 0.50% Fed rate increase and Australia’s trade linkages with China, which is likely to exert more economic strain considering the dragon nation’s latest covid woes.

Hence, AUD/USD prices may extend the early-day rebound on hawkish RBA but the bulls will seek more, which in turn highlights the RBA rate statement for details, to keep the reins.

Technically, a downward sloping trend line from April 21, near 0.7090 by the press time, holds the key to the AUD/USD pair’s further upside. Should the pair rise past 0.7090, March’s low of 0.7165 will lure the buyers ahead of the key DMAs.

Alternatively, pullback moves may initially aim for the nearby support line close to 0.7030 ahead of the 0.7000 threshold.

Key quotes

AUD/USD Price Analysis: Bulls approach 0.7100 ahead of RBA

Australia's 10-year Treasury yields flirt with seven-year high with eyes on RBA

Reserve Bank of Australia Preview: Will a 15 bps rate hike be enough to lift the aussie?

AUD/USD Forecast: Tumbling ahead of RBA’s announcement

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.